Cover
Cover - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2023 | Feb. 19, 2024 | Jun. 30, 2023 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2023 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Transition Report | false | ||
Entity File Number | 001-37576 | ||
Entity Registrant Name | Surgery Partners, Inc. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 47-3620923 | ||
Entity Address, Address Line One | 340 Seven Springs Way, Suite 600 | ||
Entity Address, City or Town | Brentwood | ||
Entity Address, State or Province | TN | ||
Entity Address, Postal Zip Code | 37027 | ||
City Area Code | 615 | ||
Local Phone Number | 234-5900 | ||
Title of 12(b) Security | Common Stock, par value $0.01 per share | ||
Trading Symbol | SGRY | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Document Financial Statement Error Correction [Flag] | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 4.7 | ||
Entity Common Stock, Shares Outstanding | 126,607,086 | ||
Documents Incorporated by Reference | Portions of the registrant's definitive proxy statement for the 2024 annual meeting of stockholders are incorporated by reference into Part III of this report. | ||
Entity Central Index Key | 0001638833 | ||
Document Fiscal Year Focus | 2023 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2023 | |
Audit Information [Abstract] | |
Auditor Name | Deloitte & Touche LLP |
Auditor Location | Nashville, Tennessee |
Auditor Firm ID | 34 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 195.9 | $ 282.9 |
Accounts receivable | 496.4 | 456.3 |
Inventories | 75.2 | 71.4 |
Prepaid expenses | 31 | 31.4 |
Other current assets | 96.5 | 79 |
Total current assets | 895 | 921 |
Property and equipment, net | 968.7 | 876.6 |
Intangible assets, net | 54.8 | 42.3 |
Goodwill | 4,326 | 4,137.1 |
Investments in and advances to affiliates | 184.1 | 190.3 |
Right-of-use operating lease assets | 255.3 | 279.1 |
Long-term deferred tax assets | 89.5 | 91.5 |
Other long-term assets | 103.3 | 144.2 |
Total assets | 6,876.7 | 6,682.1 |
Current liabilities: | ||
Accounts payable | 171.8 | 151.6 |
Accrued payroll and benefits | 73.8 | 68.9 |
Other current liabilities | 204.1 | 210.1 |
Current maturities of long-term debt | 73.3 | 62.8 |
Total current liabilities | 523 | 493.4 |
Long-term debt, less current maturities | 2,701.8 | 2,559 |
Right-of-use operating lease liabilities | 248.9 | 271.4 |
Other long-term liabilities | 41.1 | 75.4 |
Non-controlling interests—redeemable | 327.4 | 342 |
Stockholders' equity: | ||
Preferred stock, $0.01 par value; shares authorized - 20,310,000; shares issued or outstanding - none | 0 | 0 |
Common stock, $0.01 par value; shares authorized - 300,000,000; shares issued and outstanding - 126,593,727 and 125,960,834, respectively | 1.3 | 1.3 |
Additional paid-in capital | 2,497.6 | 2,478 |
Accumulated other comprehensive income | 57.5 | 76.2 |
Retained deficit | (569.2) | (557.3) |
Total Surgery Partners, Inc. stockholders' equity | 1,987.2 | 1,998.2 |
Non-controlling interests—non-redeemable | 1,047.3 | 942.7 |
Total stockholders' equity | 3,034.5 | 2,940.9 |
Total liabilities and stockholders' equity | $ 6,876.7 | $ 6,682.1 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in USD per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (shares) | 20,310,000 | 20,310,000 |
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) | 126,593,727 | 125,960,834 |
Common stock, shares outstanding (shares) | 126,593,727 | 125,960,834 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Millions | 12 Months Ended | |||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | ||
Income Statement [Abstract] | ||||
Revenues | $ 2,743.3 | $ 2,539.3 | $ 2,225.1 | |
Operating expenses: | ||||
Salaries and benefits | 793.8 | 746.4 | 644.3 | |
Supplies | 745 | 709.7 | 636.4 | |
Professional and medical fees | 296.8 | 269.2 | 230 | |
Lease expense | 84.9 | 82.4 | 90.6 | |
Other operating expenses | 175.3 | 156.7 | 132.4 | |
Cost of revenues | 2,095.8 | 1,964.4 | 1,733.7 | |
General and administrative expenses | 120.9 | 102.2 | 104 | |
Depreciation and amortization | 118.1 | 114.8 | 98.8 | |
Transaction and integration costs | 61.7 | 47.5 | 39.8 | |
Grant funds | (1.1) | (2.4) | (37.9) | |
Net loss on disposals, consolidations and deconsolidations | 14.4 | 11.1 | 2.2 | |
Equity in earnings of unconsolidated affiliates | (14.2) | (12.5) | (11.3) | |
Litigation settlements | 10.6 | (29.3) | 0 | |
Loss on debt extinguishment | 15.5 | 14.9 | 9.1 | |
Other income, net | (6.4) | (16.6) | (15.5) | |
Total operating expenses | 2,415.3 | 2,194.1 | 1,922.9 | |
Operating income | 328 | 345.2 | 302.2 | |
Interest expense, net | (193) | (234.9) | (221) | |
Income before income taxes | 135 | 110.3 | 81.2 | |
Income tax benefit (expense) | 0.3 | (23.3) | (10.5) | |
Net income | 135.3 | 87 | 70.7 | |
Less: Net income attributable to non-controlling interests | (147.2) | (141.6) | (141.6) | |
Net loss attributable to Surgery Partners, Inc. | (11.9) | (54.6) | (70.9) | |
Less: Amounts attributable to participating securities | 0 | 0 | (10.3) | |
Net loss attributable to common stockholders | (11.9) | (54.6) | (81.2) | |
Net loss attributable to common stockholders (diluted) | $ (11.9) | $ (54.6) | $ (81.2) | |
Net loss per share attributable to common stockholders: | ||||
Basic (in USD per share) | $ (0.09) | $ (0.59) | $ (1.12) | |
Diluted (in USD per share) | [1] | $ (0.09) | $ (0.59) | $ (1.12) |
Weighted average common shares outstanding: | ||||
Basic (shares) | 125,613 | 91,952 | 72,427 | |
Diluted (shares) | [1] | 125,613 | 91,952 | 72,427 |
[1] The impact of potentially dilutive securities for all periods were not considered because the effect would be anti-dilutive. |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 135.3 | $ 87 | $ 70.7 |
Other comprehensive (loss) income, net of tax: | |||
Derivative activity, net of tax of $0 | (18.7) | 107.7 | 29.5 |
Comprehensive income | 116.6 | 194.7 | 100.2 |
Less: Comprehensive income attributable to non-controlling interests | (147.2) | (141.6) | (141.6) |
Comprehensive (loss) income attributable to Surgery Partners, Inc. | $ (30.6) | $ 53.1 | $ (41.4) |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Statement of Comprehensive Income [Abstract] | |||
Derivative activity, tax | $ 0 | $ 0 | $ 0 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Millions | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive (Loss) Income | Retained Deficit | Non-Controlling Interests— Non-Redeemable |
Beginning Balance (shares) at Dec. 31, 2020 | 50,462,000 | |||||
Beginning Balance 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 | 21.8 | (70.9) | 92.7 | |||
Equity-based compensation (shares) | 737,000 | |||||
Equity-based compensation | 9 | 9 | ||||
Preferred dividends | (10.3) | (10.3) | ||||
Preferred share conversion (shares) | 22,609,000 | |||||
Preferred share conversion | 439.7 | $ 0.2 | 439.5 | |||
Equity offering (shares) | 15,525,000 | |||||
Equity offering | 554.2 | $ 0.2 | 554 | |||
Other comprehensive income (loss) | 29.5 | 29.5 | ||||
Acquisition and disposal of shares of non-controlling interests, net | 131.2 | 22.2 | 109 | |||
Distributions to non-controlling interests—non-redeemable holders | (87.6) | (87.6) | ||||
Ending Balance (shares) at Dec. 31, 2021 | 89,333,000 | |||||
Ending Balance at Dec. 31, 2021 | 1,969.6 | $ 0.9 | 1,622.3 | (31.5) | (502.7) | 880.6 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net (loss) income | 42.5 | (54.6) | 97.1 | |||
Equity-based compensation (shares) | 590,000 | |||||
Equity-based compensation | 22.5 | 22.5 | ||||
Equity offering (shares) | 36,038,000 | |||||
Equity offering | 857.7 | $ 0.4 | 857.3 | |||
Other comprehensive income (loss) | 107.7 | 107.7 | ||||
Acquisition and disposal of shares of non-controlling interests, net | 44.6 | (24.1) | 68.7 | |||
Distributions to non-controlling interests—non-redeemable holders | $ (103.7) | (103.7) | ||||
Ending Balance (shares) at Dec. 31, 2022 | 125,960,834 | 125,961,000 | ||||
Ending Balance at Dec. 31, 2022 | $ 2,940.9 | $ 1.3 | 2,478 | 76.2 | (557.3) | 942.7 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net (loss) income | 97.5 | (11.9) | 109.4 | |||
Equity-based compensation (shares) | 633,000 | |||||
Equity-based compensation | 18.5 | 18.5 | ||||
Other comprehensive income (loss) | (18.7) | (18.7) | ||||
Acquisition and disposal of shares of non-controlling interests, net | 99.3 | 1.1 | 98.2 | |||
Distributions to non-controlling interests—non-redeemable holders | $ (103) | (103) | ||||
Ending Balance (shares) at Dec. 31, 2023 | 126,593,727 | 126,594,000 | ||||
Ending Balance at Dec. 31, 2023 | $ 3,034.5 | $ 1.3 | $ 2,497.6 | $ 57.5 | $ (569.2) | $ 1,047.3 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Cash flows from operating activities: | |||
Net income | $ 135.3 | $ 87 | $ 70.7 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 118.1 | 114.8 | 98.8 |
Non-cash lease expense | 35.2 | 34.8 | 39.1 |
Non-cash interest expense, net | 25 | 25.9 | 22 |
Equity-based compensation expense | 17.7 | 18.4 | 17.4 |
Net loss on disposals, consolidations and deconsolidations | 14.4 | 11.1 | 2.2 |
Loss on debt extinguishment | 15.5 | 14.9 | 9.1 |
Deferred income taxes | (1.7) | 21.9 | 8.9 |
Equity in earnings of unconsolidated affiliates, net of distributions received | (2.2) | (1.8) | 0.2 |
Other non-cash income | 0 | (7.5) | 0 |
Changes in operating assets and liabilities, net of acquisitions and divestitures: | |||
Accounts receivable | (47.2) | (35.3) | (32.1) |
Medicare accelerated payments and deferred governmental grants | (1.2) | (58.4) | (73.6) |
DOJ settlement payments | 0 | 0 | (32.2) |
Other operating assets and liabilities | (15.1) | (67) | (43.4) |
Net cash provided by operating activities | 293.8 | 158.8 | 87.1 |
Cash flows from investing activities: | |||
Purchases of property and equipment | (88.8) | (80.6) | (57.6) |
Payments for acquisitions, net of cash acquired | (80) | (146.4) | (285.8) |
Proceeds from disposals of facilities and other assets | 25.8 | 12.9 | 6 |
Purchases of equity investments | (50.3) | (95.1) | 0 |
Proceeds from sales of equity investments | 1.4 | 12.8 | 5.4 |
Other investing activities | (33.7) | (11.5) | 0.3 |
Net cash used in investing activities | (225.6) | (307.9) | (331.7) |
Cash flows from financing activities: | |||
Principal payments on long-term debt | (807.1) | (862) | (343.2) |
Borrowings of long-term debt | 826.6 | 217.8 | 299.4 |
Payments of debt issuance costs | (24.3) | 0 | (11.7) |
Payment of premium on debt extinguishment | 0 | (11.3) | 0 |
Proceeds from equity offerings | 0 | 882.9 | 581.8 |
Payments of equity offering costs | 0 | (25.2) | (27.6) |
Distributions to non-controlling interest holders | (146.1) | (146.8) | (131) |
Proceeds (payments) related to ownership transactions with non-controlling interest holders | 8.2 | (3.4) | (28.4) |
Payments of preferred dividends | 0 | 0 | (5.1) |
Other financing activities | (12.5) | (9.9) | (17.9) |
Net cash (used in) provided by financing activities | (155.2) | 42.1 | 316.3 |
Net (decrease) increase in cash and cash equivalents | (87) | (107) | 71.7 |
Cash and cash equivalents at beginning of period | 282.9 | 389.9 | 318.2 |
Cash and cash equivalents at end of period | 195.9 | 282.9 | 389.9 |
Supplemental cash flow information: | |||
Interest paid, net of interest income received | 169.6 | 218.7 | 194.3 |
Cash paid for income taxes | 1.4 | 1.8 | 1.5 |
Non-cash purchases of property and equipment | $ 18 | $ 29.9 | $ 22.3 |
Organization and Summary of Acc
Organization and Summary of Accounting Policies | 12 Months Ended |
Dec. 31, 2023 | |
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, orthopedics and pain management, gastroenterology, ophthalmology, and general surgery. The Company's surgical hospitals also provide services such as diagnostic imaging, laboratory, 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 December 31, 2023, the Company owned or operated a portfolio of 162 surgical facilities, comprised of 144 ASCs and 18 surgical hospitals in 33 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 90 of these surgical facilities and consolidated 123 surgical facilities for financial reporting purposes. Basis of Presentation The preparation of financial statements in conformity with generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and footnotes. Examples include, but are not limited to, estimates of accounts receivable allowances, professional and general liabilities and the estimate of deferred tax assets or liabilities. Actual results could differ from those estimates. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, as well as interests in partnerships and limited liability companies controlled by the Company through its ownership of a majority voting interest or other rights granted to the Company by contract to manage and control the affiliate's business. All significant intercompany balances and transactions are eliminated in consolidation. 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. The following table presents a summary of revenues by service type as a percentage of total revenues: Year Ended December 31, 2023 2022 2021 Patient service revenues: Surgical facilities revenues 96.0 % 95.8 % 95.7 % Ancillary services revenues 2.4 % 2.7 % 3.0 % Total patient service revenues 98.4 % 98.5 % 98.7 % Other service revenues 1.6 % 1.5 % 1.3 % Total revenues 100.0 % 100.0 % 100.0 % Patient service revenues. This revenue is related to charging facility fees in exchange for providing patient care. The fee charged for health care procedures performed in surgical facilities varies depending on the type of service provided, but usually includes all charges for usage of an operating room, a recovery room, special equipment, medical supplies, nursing staff and medications. The fee does not normally include professional fees charged by the patient’s surgeon, anesthesiologist or other attending physician, which are billed directly by such physicians to the patient or third-party payor. However, in several surgical facilities, the Company charges for anesthesia services. Ancillary service revenues include fees for patient visits to the Company's physician practices, pharmacy services and diagnostic tests ordered by physicians. Patient service revenues are recognized as performance obligations are satisfied. Performance obligations are based on the nature of services provided. Typically, the Company recognizes revenue at a point in time in which services are rendered and the Company has no obligation to provide further patient services. As the Company primarily performs outpatient procedures, performance obligations are generally satisfied same day and revenue is recognized on the date of service. The Company determines the transaction price based on gross charges for services provided, net of estimated contractual adjustments 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. Currently, several states utilize supplemental Medicaid reimbursement programs for the purpose of providing reimbursement to providers to increase base rates to the levels that Medicare would have paid for the same service or for payments that offsets a portion of the cost of providing care to Medicaid and indigent patients. These programs are designed with input from the Centers for Medicare & Medicaid Services (“CMS”) and are funded with a combination of state and federal resources, including, in certain instances, fees or taxes levied on the providers. We account for payments under these supplemental programs as variable consideration and estimate the amount using the most likely amount method. The Company recognizes this variable consideration only when it is deemed probable that a significant reversal of the cumulative revenue recognized will not occur when uncertainties associated with the variable consideration are resolved. The Company reassess its variable consideration related to these supplemental reimbursement programs when new information becomes available, such as when there are program changes or receipt of final payments. Reimbursement under these programs, including the recognition of variable consideration, is reflected in patient service revenues. Taxes or other program-related costs are reflected in other operating expenses. During the year ended December 31, 2023, the State of Idaho revised its calculation of the Upper Payer Limit ("UPL") Gap. In connection with this revision, during the year ended December 31, 2023, the Company recognized revenue and the corresponding provider tax of $17.2 million and $3.1 million, respectively, based on notification received from the State of Idaho related to the cost report year ended December 31, 2021, which reflected the revision in calculation of the UPL Gap. Since the UPL program is an ongoing program in the State of Idaho and the revised calculation has been approved by CMS for the current and future periods, during the year ended December 31, 2023, the Company recognized variable consideration and the corresponding provider tax of $34.4 million and $10.4 million, respectively, for the cost report years ended December 31, 2023 and 2022. As of December 31, 2023, the Company has recorded amounts due from third-party payors related to these supplemental reimbursement programs of $17.2 million, included in other current assets and $17.2 million, included in other long-term assets in the accompanying consolidated balance sheets. As of December 31, 2023, the Company has recorded amounts due to third-party payors related to these supplemental reimbursement programs of $5.2 million, included in other current liabilities and $5.2 million included in other long-term liabilities. There were no amounts recorded as of December 31, 2022, related to these supplemental reimbursement programs. 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 and other non-patient services. The management agreements typically require the Company to provide recurring management services over a multi-year period, which are billed and collected on a monthly basis. The fees derived from these management arrangements are based on a predetermined percentage of the revenues of each facility or practice and are recognized in the period in which management services are rendered and billed. The following table sets forth patient service revenues by type of payor and as a percentage of total patient service revenues for the Company's consolidated surgical facilities (dollars in millions): Year Ended December 31, 2023 2022 2021 Amount % Amount % Amount % Patient service revenues: Private insurance $ 1,418.6 52.5 % $ 1,288.0 51.5 % $ 1,110.1 50.6 % Government 1,128.1 41.8 % 1,059.2 42.3 % 949.9 43.3 % Self-pay 68.1 2.5 % 65.9 2.6 % 61.1 2.8 % Other (1) 85.6 3.2 % 89.0 3.6 % 73.9 3.3 % Total patient service revenues 2,700.4 100.0 % 2,502.1 100.0 % 2,195.0 100.0 % Other service revenues (2) 42.9 37.2 30.1 Total revenues $ 2,743.3 $ 2,539.3 $ 2,225.1 (1) Other is comprised of anesthesia service agreements, automobile liability, letters of protection and other payor types. (2) Includes amounts attributable to related parties of $18.4 million, $15.7 million and $9.3 million for the years ended December 31, 2023, 2022 and 2021, respectively. Accounts Receivable Accounts receivable from third-party payors are recorded net of estimated implicit price concessions, which are estimated based on the historical trend of the Company's surgical hospitals’ cash collections and contractual write-offs, and for the Company's surgical facilities in general, established fee schedules, relationships with payors and procedure statistics. While changes in estimated reimbursement from third-party payors remain a possibility, the Company expects that any such changes would be minimal and, therefore, would not have a material effect on its financial condition or results of operations. Accounts receivable consists of receivables from federal and state agencies (under the Medicare and Medicaid programs), private insurance organizations, employers and patients. Management recognizes that revenues and receivables from government agencies are significant to the Company's operations, but it does not believe that there is significant credit risk associated with these government agencies. Concentration of credit risk with respect to other payors is limited because of the large number of such payors. The Company recognizes that final reimbursement of accounts receivable is subject to final approval by each third-party payor. However, because the Company has contracts with its third-party payors and also verifies insurance coverage of the patient before medical services are rendered, the amounts that are pending approval from third-party payors are not considered significant. Amounts are classified outside of self-pay if the Company has an agreement with the third-party payor or has verified a patient’s coverage prior to services rendered. The Company's policy is to collect co-payments and deductibles prior to providing medical services. Patient services of the Company are primarily non-emergency, which allows the surgical facilities to control the procedures for which third-party reimbursement is sought and obtained. The Company does not require collateral from self-pay patients. The Company's collection policies and procedures are based on the type of payor, size of claim and estimated collection percentage for each patient account. The Company analyzes accounts receivable at each of its surgical facilities to ensure the proper collection and aged category. Collection efforts include direct contact with third-party payors or patients, written correspondence and the use of legal or collection agency assistance, as required. Impairment of Long-Lived Assets, Goodwill and Intangible Assets The Company evaluates the carrying value of long-lived assets when impairment indicators are present or when circumstances indicate that impairment may exist. The evaluation is performed at the lowest level of identifiable cash flow. The Company performs an impairment test by preparing an expected undiscounted cash flow projection. If the projection indicates that the recorded amount of the long-lived asset is not expected to be recovered, the carrying value is reduced to estimated fair value. The cash flow projection and fair value represents management’s best estimate, using appropriate and customary assumptions, projections and methodologies, at the date of evaluation. For discussion on impairment for goodwill and indefinite-lived intangible assets, refer to Note 4. "Goodwill and Intangible Assets." 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 risks, 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 The physician limited partners and physician minority members of the entities that the Company controls are responsible for the supervision and delivery of medical services. The governance rights of limited partners and minority members are restricted to those that protect their financial interests. Under certain partnership and operating agreements governing these partnerships and limited liability companies, the Company could be removed as the sole general partner or managing member for certain events such as material breach of the partnership or operating agreement, gross negligence or bankruptcy. These protective rights do not preclude consolidation of the respective partnerships and limited liability companies. Ownership interests in consolidated subsidiaries held by parties other than the Company are identified and generally presented in the consolidated financial statements within the equity section but separate from the Company's equity. However, in instances in which certain redemption features that are not solely within the control of the Company are present, classification of non-controlling interests outside of permanent equity is required. Consolidated net income attributable to the Company and to the non-controlling interests are identified and presented on the consolidated statements of operations; changes in ownership interests in which the Company retains a controlling interest are accounted for as equity transactions assuming the Company continues to consolidate related entities. Certain transactions with non-controlling interests are classified within financing activities in the consolidated statements of cash flows. The consolidated financial statements of the Company include all assets, liabilities, revenues and expenses of surgical facilities in which the Company has sufficient ownership and rights to allow the Company to consolidate the surgical facilities. Similar to its investments in non-consolidated affiliates, the Company regularly engages in the purchase and sale of ownership interests with respect to its consolidated subsidiaries that do not result in a change of control. Non-Controlling Interests — Redeemable. Each partnership and limited liability company through which the Company owns and operates its surgical facilities is governed by a partnership or operating agreement, respectively. In certain circumstances, the applicable partnership or operating agreements for the Company's surgical facilities provide that the facilities will purchase all of the physician limited partners’ or physician minority members’, as applicable, ownership if certain adverse regulatory events occur, such as it becoming illegal for the physician(s) to own an interest in a surgical facility, refer patients to a surgical facility or receive cash distributions from a surgical facility. The Company believes the likelihood of an event occurring that would trigger such purchases was remote as of December 31, 2023. The non-controlling interests — redeemable are reported outside of stockholders' equity in the consolidated balance sheets. A summary of activity related to redeemable non-controlling interests for the years ended December 31, 2023 and 2022 is as follows (in millions): December 31, 2023 2022 Balance at beginning of period $ 342.0 $ 330.2 Net income attributable to non-controlling interests—redeemable 37.8 44.5 Acquisition and disposal of shares of non-controlling interests, net—redeemable (9.3) 10.4 Distributions to non-controlling interest —redeemable holders (43.1) (43.1) Balance at end of period $ 327.4 $ 342.0 Cash and Cash Equivalents The Company considers all highly liquid investments with remaining stated maturities 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. Inventories Inventories, which consist primarily of medical and drug supplies, are stated at the lower of cost or market value. Cost is determined using the first-in, first-out method. Investments in Unconsolidated Affiliates Investments in unconsolidated affiliates in which the Company exerts significant influence but does not control or otherwise consolidate are accounted for using the equity method. Equity method investments are initially recorded at cost, unless there is a deconsolidation where the investments are a result of the Company no longer having control of a previously controlled entity but still retaining a non-controlling interest. The Company had two such deconsolidations during the year ended December 31, 2022 but none during the year ended December 31, 2023. These investments are included as investments in and advances to affiliates in the accompanying consolidated balance sheets. The Company’s share of the profits and losses from these investments is reported in income from equity investments in the accompanying consolidated statements of operations. The Company monitors its investments for other-than-temporary impairment by considering factors such as current economic and market conditions and the operating performance of the investees and records reductions in carrying values when necessary. Medicare Accelerated Payments and Deferred Governmental Grants The Company received grant funds distributed under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) and other governmental assistance programs. The recognition of amounts received is conditioned upon attestation with terms and conditions that funds were used for COVID-19 related healthcare expenses or lost revenues. During the years ended December 31, 2023, 2022 and 2021, the Company recognized grant funds as a reduction in operating expenses in the amount of $1.1 million, $2.4 million and $37.9 million, respectively. There were no remaining unrecognized grant funds as of December 31, 2023. As of December 31, 2022, approximately $3 million of unrecognized grant funds received were reflected as a component of other current liabilities within the consolidated balance sheets. In addition, the Company previously received accelerated payments under the Medicare Accelerated and Advance Payment Program. The payments received were deferred and included in the consolidated balance sheets. There were no remaining deferred accelerated payments as of December 31, 2023, and remaining deferred accelerated payments were minimal as of December 31, 2022. During each of the years ended December 31, 2022 and 2021, approximately $60 million was repaid in accordance with the terms of the program. These repayments are included as a component of the change in Medicare accelerated payments and deferred government grants in the consolidated statements of cash flows. Fair Value of Financial Instruments The fair value of a financial instrument is the amount at which the instrument could be exchanged in an orderly transaction between market participants to sell the asset or transfer the liability. The Company uses fair value measurements based on inputs classified into the following hierarchy: • Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities. • Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These may include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. • Level 3: Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, depending on the nature of the item being valued. The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable 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 December 31, December 31, 2023 2022 2023 2022 Senior secured term loan $ 1,398.4 $ 1,370.0 $ 1,401.9 $ 1,359.7 6.750% senior unsecured notes due 2025 $ 185.0 $ 185.0 $ 183.2 $ 183.4 10.000% senior unsecured notes due 2027 $ 320.0 $ 320.0 $ 321.2 $ 326.8 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. Variable Interest Entities The consolidated financial statements include the accounts of variable interest entities ("VIE") in which the Company is the primary beneficiary under the provisions of 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. As of December 31, 2023, the Company's consolidated VIEs consisted of seven surgical facilities and five physician practices. The total assets (excluding goodwill and intangible assets, net) of the consolidated VIEs included in the accompanying consolidated balance sheets as of December 31, 2023 and 2022, were $65.3 million and $64.9 million, respectively, and the total liabilities of the consolidated VIEs were $41.2 million and $40.9 million, respectively. Professional and General and Workers' Compensation Insurance The Company maintains general liability and professional liability insurance in excess of self-insured retentions through third party commercial insurance carriers in amounts that management believes is sufficient for the Company's operations, although, potentially, some claims may exceed the scope of coverage in effect. The professional liability insurance coverage is on a claims-made basis and the general liability insurance is on an occurrence basis. The Company also maintains workers' compensation insurance, subject to a self-insured retention. The Company expenses the costs under the self-insured retention exposure for general and professional liability and workers' compensation claims which relate to (i) claims made during the policy period, which are offset by insurance recoveries and (ii) an estimate of claims incurred but not yet reported that are expected to be reported after the policy period expires. Reserves and provisions are based upon actuarially determined estimates using individual case-basis valuations and actuarial analysis. Reserves for professional, general and workers' compensation claim liabilities are determined with no regard for expected insurance recoveries and are presented gross on the consolidated balance sheets. Recent Accounting Pronouncements In November 2023, the FASB issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures , which requires enhanced disclosures of significant segment expenses. The ASU is effective for annual periods beginning after December 15, 2023 and interim periods beginning after December 15, 2024. The amendments in this ASU must be applied retrospectively to all periods presented and early adoption is permitted. The Company is evaluating the impact of this ASU on its consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures , which establishes new requirements for the categorization and disaggregation of information in the rate reconciliation as well as for disaggregation of income taxes paid. The ASU is effective for annual periods beginning after December 15, 2024 and interim periods beginning after December 15, 2025. The amendments in this ASU may be applied prospectively or retrospectively to all periods presented and early adoption is permitted. The Company is evaluating the impact of this ASU on its consolidated financial statements. |
Acquisitions, Disposals and Dec
Acquisitions, Disposals and Deconsolidations | 12 Months Ended |
Dec. 31, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions, Disposals and Deconsolidations | Acquisitions, Disposals and Deconsolidations The Company accounts for all transactions that represent business combinations using the acquisition method of accounting, where the identifiable assets acquired, liabilities assumed and any non-controlling interest in the acquired entity are recognized and measured at their fair values on the date the Company obtains control in the acquiree. The fair values assigned to certain assets acquired and liabilities assumed that are not finalized for reporting periods following the acquisition date are estimated on a preliminary basis and are subject to adjustment as new facts and circumstances emerge that were present at the date of acquisition. Such adjustments are recorded as soon as practical and within the measurement period (defined as the date through which all information required to identify and measure the consideration transferred, assets acquired, liabilities assumed and any non-controlling interests has been obtained, limited to one year from the acquisition date). Goodwill is determined as the excess of the fair value of the consideration conveyed plus the fair value of any non-controlling interests in the acquisition over the fair value of the net assets acquired. Acquisitions During the year ended December 31, 2023: • The Company acquired a controlling interest in five surgical facilities, four physician practices and an in-development denovo surgical facility for aggregate cash consideration of $55.5 million, net of cash acquired, and non-cash consideration of $1.3 million, which consisted of a non-controlling interest in one of the Company's existing surgical facilities. In connection with these acquisitions, the Company preliminarily recognized non-controlling interests of $38.7 million and goodwill of $84.7 million. • The Company acquired a controlling interest in six surgical facilities and an in-development de novo surgical facility, which were previously accounted for as equity method investments, for aggregate cash consideration of $24.3 million, net of cash acquired. The Company also amended the operating agreement of a previously non-controlled surgical facility resulting in the Company obtaining a controlling interest in the facility. These transactions resulted in the consolidation of the previously non-consolidated entities. The previously held non-controlling interests were remeasured and recorded at fair value as of the dates of the transactions. The fair value measurement utilizes Level 3 inputs, which includes unobservable data. The acquisition date fair value of the previously held non-controlling interests was $38.7 million. As a result of increasing its ownership interest, the Company recognized a net loss of $9.3 million included in net loss on disposals, consolidations and deconsolidations in the consolidated statements of operations for the year ended December 31, 2023. The net loss was determined based on the difference between the fair value of the Company's previously held non-controlling interests in the entities and the carrying values immediately prior to the transactions. In connection with the consolidation of these facilities, the Company preliminarily recognized non-controlling interests of $84.5 million and goodwill of $142.5 million. • The Company acquired a non-controlling interest in five surgical facilities and two in-development de novo surgical facilities for aggregate cash consideration of $50.3 million. The non-controlling interests were accounted for as equity method investments and recorded as a component of investments in and advances to affiliates in the accompanying consolidated balance sheets. The Company also paid cash consideration of $21.0 million to acquire management rights from the prior management service provider related to four of the aforementioned surgical facilities. Management rights agreements are accounted for and recorded as a component of intangible assets, net in the accompanying consolidated balance sheets. The cash paid to acquire the management rights is presented as a component of other investing activities on the consolidated statements of cash flows. During the year ended December 31, 2022: • The Company acquired a controlling interest in seven surgical facilities, two of which were merged into existing surgical facilities, and a physician practice for aggregate cash consideration of $146.4 million, net of cash acquired, non-cash consideration of $5.6 million and assumed debt of $39.4 million. The non-cash consideration consisted of a non-controlling interest in two of the Company's existing surgical facilities. In connection with the acquisitions, the Company preliminarily recognized non-controlling interests of $89.1 million and goodwill of $271.7 million. • The Company acquired a non-controlling interest in seven surgical facilities and seven in-development de novo surgical facilities for aggregate cash consideration of $95.1 million. The non-controlling interests were accounted for as equity method investments and recorded as a component of investments in and advances to affiliates in the accompanying consolidated balance sheets. During the year ended December 31, 2021: • The Company acquired controlling interests in eight surgical facilities, two of which were merged into existing facilities, and two physician practices for aggregate cash consideration of $285.8 million, net of cash acquired. In connection with the acquisitions, the Company preliminarily recognized non-controlling interests of $185.9 million and goodwill of $446.1 million. Disposals and Deconsolidations During the year ended December 31, 2023: • The Company sold its interests in six surgical facilities for aggregate net cash proceeds of $30.4 million, a portion of which was held in escrow pursuant to the purchase agreements for such transactions. In connection with these transactions, the Company recognized a pre-tax gain of $26.9 million included in net loss on disposals, consolidations and deconsolidations • The Company disposed of its non-controlling interests in a surgical facility and an in-development de novo surgical facility, which were previously accounted for as equity method investments, for cash proceeds of $1.5 million. In connection with these transactions, the Company recognized a pre-tax loss of $13.7 million included in net loss on disposals, consolidations and deconsolidations in the consolidated statements of operations for the year ended December 31, 2023. During the year ended December 31, 2022: • The Company sold its interests in two surgical facilities, one of which was previously accounted for as an equity method investment, for net cash proceeds of $25.7 million. In connection with the sales, the Company recognized a pre-tax loss of $4.5 million included in net loss on disposals, consolidations and deconsolidations in the consolidated statements of operations for the year ended December 31, 2022. • The Company contributed its interests in two surgical facilities as non-cash consideration for non-controlling interests in two new separate entities. As a result of these transactions, the Company lost control of the previously controlled surgical facilities but retains a non-controlling interest in each, resulting in the deconsolidation of the previously consolidated entities. The remaining non-controlling interests were accounted for as equity method investments, and initially measured and recorded at fair value as of the dates of the transactions. The fair value measurement utilizes Level 3 inputs, which includes unobservable data, to measure the fair value of the retained non-controlling interests. The fair value determination was based on a combination of multiple valuation methods, which included discounted cash flow and market value approach, which incorporates estimates of future earnings and market valuation multiples for certain guideline companies. The fair value of the investments of $9.8 million was recorded as a component of investments in and advances to affiliates in the accompanying consolidated balance sheets. Further, based on the valuation, the transactions resulted in a pretax net loss on deconsolidations of $5.6 million, which is included in net loss on disposals, consolidations and deconsolidations in the accompanying consolidated statements of operations for the year ended December 31, 2022. The net loss was determined based on the difference between the fair value of the Company's retained interests in the entities and the carrying values of both the tangible and intangible assets of the entities immediately prior to the transactions. During the year ended December 31, 2021: • |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment are stated at cost or, if obtained through acquisition, at fair value determined on the date of acquisition. Depreciation is recognized using the straight-line method over the estimated useful lives of the assets, generally 20 to 40 years for buildings and building improvements, three five The Company also leases certain facilities and equipment under finance leases. Assets held under finance leases are stated at the present value of lease payments at the inception of the related lease. Such assets are amortized on a straight-line basis over the lesser of the lease term or the remaining useful life of the leased asset. A summary of property and equipment follows (in millions): December 31, 2023 2022 Land $ 9.2 $ 11.1 Buildings and improvements 225.3 164.0 Furniture and equipment 29.5 26.7 Computer and software 108.5 96.6 Medical equipment 310.1 263.1 Right-of-use finance lease assets 716.3 631.3 Construction in progress 24.2 58.1 Property and equipment, at cost 1,423.1 1,250.9 Less: Accumulated depreciation (454.4) (374.3) Property and equipment, net $ 968.7 $ 876.6 The increase in right-of-use finance lease assets includes the impact of the modification of certain existing facility real estate leases that were previously classified as operating leases. See Note 6. "Leases" for further discussion. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets 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. The Company tests its goodwill for impairment in the fourth quarter of each year, or more frequently if certain indicators arise. The Company tests for goodwill impairment at the reporting unit level, which is defined as one level below an operating segment. During 2023, the Company identified two reporting units, which include the following: 1) Surgical Facilities and 2) Ancillary Services. The Company compares the carrying value of the net assets of the reporting unit to the estimated fair value of the reporting unit. To determine the fair value of the reporting units, the Company obtained valuations at the reporting unit level prepared by third-party valuation specialists which typically utilizes a combination of the income and market approaches. As of October 1, 2023, prior to its annual impairment testing, all of the Company's goodwill was allocated to the Surgical Facilities reporting unit. As of the October 1, 2023 valuation, the fair value for the Surgical Facilities reporting unit was substantially in excess of its carrying value. A detailed evaluation of potential impairment indicators was performed, which specifically considered changes in interest rates, inflation risk and market volatility. While the Company believes that all assumptions utilized in the testing were appropriate, they may not reflect actual outcomes that could occur. 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 material 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 could result in a material impairment charge in the future. In 2023, 2022 and 2021, there were no non-cash impairment charges. A summary of the changes in the carrying amount of goodwill follows (in millions): December 31, 2023 2022 Balance at beginning of period $ 4,137.1 $ 3,911.8 Acquisitions, including post acquisition adjustments 225.9 269.7 Disposals and deconsolidations (37.0) (44.4) Balance at end of period $ 4,326.0 $ 4,137.1 A summary of the Company's acquisitions, disposals and deconsolidations for the years ended December 31, 2023 and 2022 is included in Note 2. "Acquisitions and Dispositions." Intangible Assets The Company has indefinite-lived intangible assets related to the certificates of need held in jurisdictions where certain of its surgical facilities are located, Medicare licenses and certain management rights agreements. The Company tests these intangible assets for impairment in the fourth quarter of each year, or more frequently if certain indicators arise. The Company also has finite-lived intangible assets related to physician guarantee agreements, non-compete agreements and management rights agreements. Physician guarantees are amortized into salaries and benefits costs in the consolidated statements of operations over the commitment period of the contract, generally two two A summary of the components of intangible assets follows (in millions): December 31, 2023 December 31, 2022 Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Finite-lived intangible assets: Management rights agreements $ 42.8 $ (12.0) $ 30.8 $ 23.9 $ (10.2) $ 13.7 Other 30.0 (20.6) 9.4 28.5 (14.9) 13.6 Total finite-lived intangible assets 72.8 (32.6) 40.2 52.4 (25.1) 27.3 Indefinite-lived intangible assets 14.6 — 14.6 15.0 — 15.0 Total intangible assets $ 87.4 $ (32.6) $ 54.8 $ 67.4 $ (25.1) $ 42.3 Amortization expense for intangible assets was $7.6 million, $6.4 million and $6.9 million for of the years ended December 31, 2023, 2022 and 2021, respectively. Total estimated amortization expense for the next five years and thereafter related to intangible assets follows (in millions): 2024 $ 5.8 2025 5.3 2026 5.0 2027 3.8 2028 3.3 Thereafter 17.0 Total $ 40.2 |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Dec. 31, 2023 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt A summary of long-term debt follows (in millions): December 31, 2023 2022 Senior secured term loan (1) $ 1,398.4 $ 1,370.0 Senior secured revolving credit facility — — 6.750% senior unsecured notes due 2025 185.0 185.0 10.000% senior unsecured notes due 2027 320.0 320.0 Notes payable and other secured loans 205.2 171.3 Finance lease obligations 693.6 585.7 Less: unamortized debt issuance costs and discounts (27.1) (10.2) Total debt 2,775.1 2,621.8 Less: current maturities 73.3 62.8 Total long-term debt $ 2,701.8 $ 2,559.0 (1) Includes unamortized fair value discount of $1.6 million and $2.1 million as of December 31, 2023 and 2022, respectively. New Credit Facilities On December 19, 2023, the Company entered into a credit agreement (the “Credit Agreement”), which provided for a $1.4 billion senior secured term loan (the "Term Loan") and a $703.8 million revolving credit facility (the "Revolver" and, together with the Term Loan, the "New Credit Facilities"). Subject to certain conditions and requirements set forth in the Credit Agreement, the Company may request one or more additional incremental term loan facilities or one or more increases in the commitments under the Revolver. In connection with entering the New Credit Facilities, the Company terminated the then-existing senior secured credit facilities, originally dated as of August 31, 2017 and, as amended thereafter (the "2017 Credit Agreement"). Proceeds from the 2023 Term Loan were used to repay in full the amounts previously outstanding under the 2017 Credit Agreement and pay fees and expenses in connection with the New Credit Facilities. The Term Loan matures on December 19, 2030. The Term Loan bears interest at a rate per annum equal to (x) the forward-looking term rate based on Secured Overnight Financing Rate (“Term SOFR”) plus 3.50% per annum or (y) an alternate base rate (which will be the highest of (i) the prime rate plus, (ii) 0.50% per annum above the federal funds effective rate and (iii) Term SOFR plus 1.00% per annum, subject to a 1.00% floor) (the “Base Rate”) plus 2.50% per annum. The Term Loan amortizes in equal quarterly installments of 0.25% of the aggregate original principal amount outstanding on the Term Loan, which will commence on or around the last business day of the fiscal quarter ending June 30, 2024. Subject to the right of reinvestment and certain other exceptions, the Term Loan requires mandatory prepayments upon the occurrence of certain events as defined in the Credit Agreement. Commencing in the year ended December 31, 2024, the Term Loan is also subject to an annual mandatory prepayment in an amount equal to a percentage of excess cash flow as determined based on the first lien net leverage ratio as of the last day of the applicable fiscal year. The Revolver matures on December 19, 2028. Interest on any loans drawn under the Revolver shall bear interest at a rate per annum equal to (x) Term SOFR plus 3.25% per annum or (y) the Base Rate plus 2.25% per annum. In addition, the Company is required to pay a commitment fee ranging from 0.50% to 0.25% per annum, depending on the Company’s first lien net leverage ratio, in respect of unused commitments under the Revolver. The Revolver may be utilized for working capital, capital expenditures and general corporate purposes. As of December 31, 2023, the Company's availability on the Revolver was $694.3 million (including outstanding letters of credit of $9.5 million). With respect to the Revolver, the Company is required to comply with a maximum first lien net leverage ratio of 5.00:1.00, which covenant will be tested quarterly on a trailing four quarter basis only if, as of the last day of the applicable fiscal quarter the Revolver is drawn in an aggregate amount greater than 40% of the total commitments under the Revolver. Such financial maintenance covenant is subject to an equity cure. The New Credit Facilities are guaranteed, on a joint and several basis, by SP Holdco I, Inc. and each of Surgery Center Holdings, Inc.'s current and future wholly-owned domestic restricted subsidiaries (subject to certain exceptions) (the "Subsidiary Guarantors") and are secured by a first priority security interest in substantially all of Surgery Center Holdings, Inc.'s, SP Holdco I, Inc.'s and the Subsidiary Guarantors’ assets (subject to certain exceptions). The New Credit Facilities includes customary negative covenants restricting or limiting the ability of the Company and its restricted subsidiaries, to, among other things, sell assets, alter its business, engage in mergers, acquisitions and other business combinations, declare dividends or redeem or repurchase equity interests, incur additional indebtedness or guarantees, make loans and investments, incur liens, enter into transactions with affiliates, prepay certain junior debt, and modify or waive certain material agreements and organizational documents, in each case, subject to customary and other agreed upon exceptions. The New Credit Facilities also contain customary affirmative covenants and events of default. As of December 31, 2023, the Company was in compliance with the covenants contained in the Credit Agreement. In connection with the aforementioned financing transactions, the Company recorded debt issuance costs and discount of $34.5 million, and a debt extinguishment loss of $15.5 million, included in loss on debt extinguishment in the accompanying consolidated statement of operations for the year ended December 31, 2023. The loss includes the partial write-off of unamortized debt issuance costs and discounts related to the prior existing term loans, and a portion of debt issuance costs incurred with entering the New Credit Facilities.] Prior to the New Credit Facilities, the 2017 Credit Agreement provided for a $1.545 billion senior secured term loan (the "2017 Term Loan") and a $350.0 million senior secured revolving credit facility. During 2022, the Company made a voluntary prepayment of $150.0 million without premium or penalty. In connection with prepayment, the Company wrote-off a portion of unamortized debt issuance costs and discounts, resulting in a debt extinguishment loss of $1.0 million, included in loss on debt extinguishment in the accompanying consolidated statements of operations. During 2021, in connection with certain amendments to the 2017 Credit Agreement, the Company recorded a debt extinguishment loss of $9.1 million, included in loss on debt extinguishment in the accompanying consolidated statements of operations for the year ended December 31, 2021, related to the partial write-off of unamortized debt issuance costs and discounts and a portion of debt issuance costs incurred with the amendments. 6.750% Senior Unsecured Notes due 2025 Effective June 30, 2017, the Company issued $370.0 million in gross proceeds of senior unsecured notes due July 1, 2025 (the "2025 Unsecured Notes"). The 2025 Unsecured Notes bear interest at the rate of 6.750% per year, payable semi-annually on January 1 and July 1 of each year. The 2025 Unsecured Notes are a senior unsecured obligation of Surgery Center Holdings, Inc. and are guaranteed on a senior unsecured basis by each of Surgery Center Holdings, Inc.'s existing and future domestic wholly-owned restricted subsidiaries that guarantees the New Credit Facilities (subject to certain exceptions). The Company may redeem the 2025 Unsecured Notes, in whole or in part, at any time, at 100.0% of the principal amount to be redeemed, plus accrued and unpaid interest, if any, up to, but excluding, the date of redemption. In December 2022, the Company redeemed $185.0 million of the 2025 Unsecured Notes (the "2025 Notes Redemption"). The redemption price was equal to 100.0% of the principal amount redeemed plus accrued and unpaid interest of $6.2 million. If Surgery Center Holdings, Inc. experiences a change in control under certain circumstances, it must offer to purchase the 2025 Unsecured Notes at a purchase price equal to 101.0% of the principal amount, plus accrued and unpaid interest, if any, up to, but excluding, the date of repurchase. The 2025 Unsecured Notes contain customary affirmative and negative covenants, which, among other things, limit the Company’s ability to incur additional debt, pay dividends, create or assume liens, effect transactions with its affiliates, guarantee payment of certain debt securities, sell assets, merge, consolidate, enter into acquisitions and effect sale and leaseback transactions. 10.000% Senior Unsecured Notes due 2027 Effective April 11, 2019 and July 30, 2020, the Company issued $430.0 million and $115.0 million, respectively, in an aggregate principal amount of senior unsecured notes due April 15, 2027 (the "2027 Unsecured Notes"). The 2027 Unsecured Notes bear interest at the rate of 10.000% per annum, payable semi-annually on April 15 and October 15 of each year. The 2027 Unsecured Notes are a senior unsecured obligation of Surgery Center Holdings, Inc. and are guaranteed on a senior unsecured basis by each of Surgery Center Holdings, Inc.'s existing and future domestic wholly-owned restricted subsidiaries that guarantees the New Credit Facilities (subject to certain exceptions). The Company may redeem the 2027 Unsecured Notes, in whole or in part, at the redemption prices set forth below (expressed as a percentage of the principal amount of notes to be redeemed), plus accrued and unpaid interest, if any, up to, but excluding, the date of redemption: April 15, 2023 to April 14, 2024 102.500 % April 15, 2024 and thereafter 100.000 % In December 2022, the Company redeemed $225.0 million of the 2027 Unsecured Notes. The redemption price was equal to 105.0% of the principal amount redeemed plus accrued and unpaid interest of $4.7 million. In connection with the redemption, the Company recorded a debt extinguishment loss of $13.9 million, included in loss on debt extinguishment in the consolidated statements of operations for the year ended December 31, 2022. The loss includes the redemption premium paid and the write-off a portion of unamortized debt issuance costs. If Surgery Center Holdings, Inc. experiences a change of control under certain circumstances, it must offer to purchase the 2027 Unsecured Notes at a purchase price equal to 101.0% of the aggregate principal amount of notes, plus accrued and unpaid interest, if any, up to, but excluding, the date of repurchase. The 2027 Unsecured Notes contain customary affirmative and negative covenants, which, among other things, limit the Company’s ability to incur additional debt, pay dividends, create or assume liens, effect transactions with its affiliates, guarantee payment of certain debt securities, sell assets, merge, consolidate, enter into acquisitions and effect sale and leaseback transactions. Other Debt Certain of the Company’s subsidiaries have outstanding indebtedness under notes payable and other secured loans, which is collateralized by the real estate and equipment owned by the surgical facilities to which the loans were made, and right-of-use finance lease obligations for which the Company is liable to various vendors for several property and equipment leases classified as finance leases. The various bank indebtedness agreements contain covenants to maintain certain financial ratios and also restrict encumbrance of assets, creation of indebtedness, investing activities and payment of distributions. At December 31, 2023, the Company was in compliance with its covenants contained in the credit agreements. The increase in finance lease obligations is primarily a result of the modification of certain existing facility real estate leases that were previously classified as operating leases. See Note 6. "Leases" for further discussion. Maturities A summary of maturities for the Company's long-term debt, excluding unamortized debt issuance costs and the unamortized fair value discount discussed above, for the next five years and thereafter as of December 31, 2023 follows (in millions): 2024 $ 73.3 2025 264.8 2026 62.6 2027 376.4 2028 51.1 Thereafter 1,975.6 Total $ 2,803.8 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2023 | |
Leases [Abstract] | |
Leases | Leases The Company determines if an arrangement is a lease at inception. Right-of-use assets represent the right to use the underlying assets for the lease term and the lease liabilities represent the obligation to make lease payments arising from the leases. Right-of-use assets and liabilities are recognized at commencement date based on the present value of future lease payments over the lease term, which includes only payments that are fixed and determinable at the time of commencement. When readily determinable, the Company uses the interest rate implicit in a lease to determine the present value of future lease payments. For leases where the implicit rate is not readily determinable, the Company's incremental borrowing rate is used. The Company calculates its incremental borrowing rate on a periodic basis using a third-party financial model that estimates the rate of interest the Company would have to pay to borrow an amount equal to the total lease payments on a collateralized basis over a term similar to the lease. The Company applies its incremental borrowing rate using a portfolio approach. The right-of-use asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. The Company's operating leases are primarily for real estate, including medical office buildings, and corporate and other administrative offices. The Company's finance leases are primarily for medical equipment and information technology and telecommunications assets. The Company's finance leases also include certain land, buildings and improvements as discussed in Note 3. "Property and Equipment." Real estate lease agreements typically have initial terms of ten years and may include one or more options to renew. Certain leases also include options to purchase the leased property. The useful life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. The majority of the Company's medical equipment leases have a bargain purchase option that is reasonably certain of exercise, so these assets are depreciated over their useful life. The Company's lease agreements do not contain any material residual value guarantees, restrictions or covenants. Certain of the Company's lease agreements require the Company to pay common area maintenance, repairs, property taxes and insurance costs, which are variable amounts based on actual costs incurred during each applicable period. Certain lease agreements also include escalating rent payments that are not fixed at commencement but are based on an index that is determined in future periods over the lease term based on changes in the Consumer Price Index or other measure of cost inflation. These variable components of lease payments are expensed as incurred and are not included in the determination of the right-of-use asset or lease liability. The following table presents the components of the Company's right-of-use assets and liabilities related to leases and their classification in the consolidated balance sheets at December 31, 2023 and 2022 (in millions): Classification in Consolidated Balance Sheets December 31, 2023 December 31, 2022 Assets: Operating lease assets Right-of-use operating lease assets $ 255.3 $ 279.1 Finance lease assets Property and equipment, net of accumulated depreciation 587.0 529.6 Total leased assets $ 842.3 $ 808.7 Liabilities: Operating lease liabilities: Current Other current liabilities $ 37.6 $ 36.5 Long-term Right-of-use operating lease liabilities 248.9 271.4 Total operating lease liabilities 286.5 307.9 Finance lease liabilities: Current Current maturities of long-term debt 25.4 20.9 Long-term Long-term debt, less current maturities 668.2 564.8 Total finance lease liabilities 693.6 585.7 Total lease liabilities $ 980.1 $ 893.6 During the year ended December 31, 2023, the Company extended certain existing facility real estate leases, resulting in the reclassification of the leases from operating to finance. The modifications resulted in an increase to finance lease liabilities and assets of $97.1 million and $95.7 million, respectively, including the reclassification of existing operating lease liabilities and assets of $38.4 million and $36.9 million, respectively. The following table presents the weighted-average lease terms and discount rates at December 31, 2023 and 2022 (in millions): December 31, 2023 December 31, 2022 Operating Leases Finance Leases Operating Leases Finance Leases Weighted-average remaining lease term 9.2 years 20.5 years 9.2 years 20.7 years Weight average discount rate 8.2 % 8.2 % 9.1 % 8.8 % The following table presents the components of the Company's lease expense and their classification in the consolidated statement of operations for the years ended December 31, 2023 and 2022 (in millions): December 31, 2023 December 31, 2022 Operating lease costs $ 65.7 $ 65.5 Finance lease costs: Amortization of leased assets 39.9 38.8 Interest on lease liabilities 48.6 42.7 Total finance lease costs 88.5 81.5 Variable and short-term lease costs 20.1 18.5 Total lease costs $ 174.3 $ 165.5 During the years ended December 31, 2023 and 2022, the Company incurred lease costs of $19.5 million and $19.6 million, respectively, under operating lease agreements with physician investors who are related parties. During the years ended December 31, 2023 and 2022, the Company paid rent of $26.4 million and $26.3 million, respectively, under finance lease agreements with physician investors and a lessor who are related parties. One of the Company's surgical facilities has a non-controlling ownership interest in the lessor. Payments are allocated to principal adjustments of the finance lease liability and interest expense. The following table presents supplemental cash flow information for the years ended December 31, 2023 and 2022 (dollars in millions): December 31, 2023 December 31, 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows from operating leases $ 63.7 $ 63.2 Operating cash outflows from finance leases 45.8 41.7 Financing cash outflows from finance leases 26.7 24.6 Right-of-use assets obtained in exchange for lease obligations: Operating leases 60.1 57.3 Finance leases 167.5 180.2 Future maturities of lease liabilities at December 31, 2023 are presented in the following table (in millions): Operating Leases Finance Leases 2023 $ 59.1 $ 77.2 2024 54.6 75.6 2025 50.6 72.8 2026 42.6 69.1 2027 33.1 65.2 Thereafter 169.7 1,220.6 Total lease payments 409.7 1,580.5 Less: imputed interest (123.2) (886.9) Total lease obligations $ 286.5 $ 693.6 |
Leases | Leases The Company determines if an arrangement is a lease at inception. Right-of-use assets represent the right to use the underlying assets for the lease term and the lease liabilities represent the obligation to make lease payments arising from the leases. Right-of-use assets and liabilities are recognized at commencement date based on the present value of future lease payments over the lease term, which includes only payments that are fixed and determinable at the time of commencement. When readily determinable, the Company uses the interest rate implicit in a lease to determine the present value of future lease payments. For leases where the implicit rate is not readily determinable, the Company's incremental borrowing rate is used. The Company calculates its incremental borrowing rate on a periodic basis using a third-party financial model that estimates the rate of interest the Company would have to pay to borrow an amount equal to the total lease payments on a collateralized basis over a term similar to the lease. The Company applies its incremental borrowing rate using a portfolio approach. The right-of-use asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. The Company's operating leases are primarily for real estate, including medical office buildings, and corporate and other administrative offices. The Company's finance leases are primarily for medical equipment and information technology and telecommunications assets. The Company's finance leases also include certain land, buildings and improvements as discussed in Note 3. "Property and Equipment." Real estate lease agreements typically have initial terms of ten years and may include one or more options to renew. Certain leases also include options to purchase the leased property. The useful life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. The majority of the Company's medical equipment leases have a bargain purchase option that is reasonably certain of exercise, so these assets are depreciated over their useful life. The Company's lease agreements do not contain any material residual value guarantees, restrictions or covenants. Certain of the Company's lease agreements require the Company to pay common area maintenance, repairs, property taxes and insurance costs, which are variable amounts based on actual costs incurred during each applicable period. Certain lease agreements also include escalating rent payments that are not fixed at commencement but are based on an index that is determined in future periods over the lease term based on changes in the Consumer Price Index or other measure of cost inflation. These variable components of lease payments are expensed as incurred and are not included in the determination of the right-of-use asset or lease liability. The following table presents the components of the Company's right-of-use assets and liabilities related to leases and their classification in the consolidated balance sheets at December 31, 2023 and 2022 (in millions): Classification in Consolidated Balance Sheets December 31, 2023 December 31, 2022 Assets: Operating lease assets Right-of-use operating lease assets $ 255.3 $ 279.1 Finance lease assets Property and equipment, net of accumulated depreciation 587.0 529.6 Total leased assets $ 842.3 $ 808.7 Liabilities: Operating lease liabilities: Current Other current liabilities $ 37.6 $ 36.5 Long-term Right-of-use operating lease liabilities 248.9 271.4 Total operating lease liabilities 286.5 307.9 Finance lease liabilities: Current Current maturities of long-term debt 25.4 20.9 Long-term Long-term debt, less current maturities 668.2 564.8 Total finance lease liabilities 693.6 585.7 Total lease liabilities $ 980.1 $ 893.6 During the year ended December 31, 2023, the Company extended certain existing facility real estate leases, resulting in the reclassification of the leases from operating to finance. The modifications resulted in an increase to finance lease liabilities and assets of $97.1 million and $95.7 million, respectively, including the reclassification of existing operating lease liabilities and assets of $38.4 million and $36.9 million, respectively. The following table presents the weighted-average lease terms and discount rates at December 31, 2023 and 2022 (in millions): December 31, 2023 December 31, 2022 Operating Leases Finance Leases Operating Leases Finance Leases Weighted-average remaining lease term 9.2 years 20.5 years 9.2 years 20.7 years Weight average discount rate 8.2 % 8.2 % 9.1 % 8.8 % The following table presents the components of the Company's lease expense and their classification in the consolidated statement of operations for the years ended December 31, 2023 and 2022 (in millions): December 31, 2023 December 31, 2022 Operating lease costs $ 65.7 $ 65.5 Finance lease costs: Amortization of leased assets 39.9 38.8 Interest on lease liabilities 48.6 42.7 Total finance lease costs 88.5 81.5 Variable and short-term lease costs 20.1 18.5 Total lease costs $ 174.3 $ 165.5 During the years ended December 31, 2023 and 2022, the Company incurred lease costs of $19.5 million and $19.6 million, respectively, under operating lease agreements with physician investors who are related parties. During the years ended December 31, 2023 and 2022, the Company paid rent of $26.4 million and $26.3 million, respectively, under finance lease agreements with physician investors and a lessor who are related parties. One of the Company's surgical facilities has a non-controlling ownership interest in the lessor. Payments are allocated to principal adjustments of the finance lease liability and interest expense. The following table presents supplemental cash flow information for the years ended December 31, 2023 and 2022 (dollars in millions): December 31, 2023 December 31, 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows from operating leases $ 63.7 $ 63.2 Operating cash outflows from finance leases 45.8 41.7 Financing cash outflows from finance leases 26.7 24.6 Right-of-use assets obtained in exchange for lease obligations: Operating leases 60.1 57.3 Finance leases 167.5 180.2 Future maturities of lease liabilities at December 31, 2023 are presented in the following table (in millions): Operating Leases Finance Leases 2023 $ 59.1 $ 77.2 2024 54.6 75.6 2025 50.6 72.8 2026 42.6 69.1 2027 33.1 65.2 Thereafter 169.7 1,220.6 Total lease payments 409.7 1,580.5 Less: imputed interest (123.2) (886.9) Total lease obligations $ 286.5 $ 693.6 |
Derivatives and Hedging Activit
Derivatives and Hedging Activities | 12 Months Ended |
Dec. 31, 2023 | |
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 and interest rate caps as part of its interest rate risk management strategy. During 2023 and 2022, such derivatives have been used to hedge the variable cash flows associated with existing variable-rate debt. The key terms of interest rate swaps and interest rate caps outstanding are presented below: December 31, 2023 December 31, 2022 Description Effective Date Notional Amount (in millions) Status Notional Amount (in millions) Status Maturity Date Pay-fixed swap May 7, 2021 $ 435.0 Active $ 435.0 Active March 31, 2025 Pay-fixed swap May 7, 2021 330.0 Active 330.0 Active March 31, 2025 Pay-fixed swap May 7, 2021 435.0 Active 435.0 Active March 31, 2025 Interest rate cap September 30, 2021 151.4 Active 159.1 Active March 31, 2025 Interest rate cap September 30, 2021 8.7 Active 159.1 Active March 31, 2025 Pay-fixed swap November 30, 2018 — Matured 165.0 Active November 30, 2023 Pay-fixed swap November 30, 2018 — Matured 120.0 Active November 30, 2023 Pay-fixed swap June 28, 2019 — Matured 150.0 Active November 30, 2023 Receive-fixed swap April 30, 2021 — Matured (165.0) Active November 30, 2023 Receive-fixed swap April 30, 2021 — Matured (120.0) Active November 30, 2023 Receive-fixed swap April 30, 2021 — Matured (150.0) Active November 30, 2023 $ 1,360.1 $ 1,518.2 As of December 31, 2023, the Company had three interest rate swaps with a total net notional amount of $1.2 billion. The interest rate swaps are pay-fixed, receive 1-Month SOFR (subject to a minimum of 0.75%) designated in cash flow hedging relationships with a termination date of March 31, 2025. The six matured interest rate swaps were undesignated and consisted of three pay-fixed, received 1-Month SOFR (subject to a minimum of 1.00%) interest rate swaps and three pay 1-Month SOFR (subject to a minimum of 1.00%), receive-fixed interest rate swaps. The interest rate swaps matured effective November 30, 2023. The pay-floating, receive-fixed swaps were designed to economically offset the undesignated pay-fixed, receive-floating swaps. The Company's interest rate derivative agreements were indexed to LIBOR prior to permanent cessation on June 30, 2023 and automatically transitioned to SOFR in accordance with their respective fallback provisions. As of December 31, 2023, the Company had two interest rate caps designated in cash flow hedging relationships with a total notional amount of $160.1 million. The interest rate caps each have a termination date of March 31, 2025. In connection with the voluntary prepayment on the 2017 Term Loan in 2022 (see Note 5. "Long-Term Debt), the Company de-designated a portion of one of its interest rate caps. The amount of unrealized gains recorded in other comprehensive income ("OCI") related to the de-designated notional amount at the time of the de-designation was $7.5 million. This amount was reclassified from accumulated OCI into income and is included as a component of other income in the consolidated statement of operations for the year ended December 31, 2022. No cash was exchanged between the Company and the counterparties due to the de-designation, therefore the non-cash transactions had no impact on the consolidated statements of cash flows. During the year ended December 31, 2023, the Company partially terminated the previously de-designated portion of one of its interest rate caps. In connection with the termination, the Company received $8.6 million, which is included as a component of operating activities in the consolidated statements of cash flows for the year ended December 31, 2023. The pay-fixed, receive floating interest rate swaps 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 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 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 consolidated cash flows. Within the Company’s consolidated balance sheets, the interest rate caps, including the undesignated portion, are recorded at fair value. The cash flows related to the interest rate caps, including the undesignated portion, are classified as operating activities in the consolidated statements of cash flows. The Company's interest rate swap agreements, excluding the portion treated as debt, are recognized at fair value in the 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 fair value of the interest rate caps are determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rise above the strike rate of the caps. The variable interest rates used in the calculation of projected receipts on the caps are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities. The interest rate caps are classified using Level 2 inputs within the fair value hierarchy. 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 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 $53.8 million will be reclassified as a decrease to interest expense. The following table presents the fair values of our derivatives and their location on the consolidated balance sheets (in millions): December 31, 2023 December 31, 2022 Location Assets Liabilities Assets Liabilities Derivatives not designated as hedging instruments Interest rate caps Other long-term assets $ — $ — $ 9.0 $ — Interest rate swaps Other long-term assets — — 8.5 — Interest rate swaps Other long-term liabilities — — — 8.5 Derivatives in cash flow hedging relationships Interest rate caps Other long-term assets 6.0 — 10.4 — Interest rate swaps Other long-term assets 51.4 — 85.5 — Interest rate swaps Other long-term liabilities (1) — 17.8 — 31.9 Total $ 57.4 $ 17.8 $ 113.4 $ 40.4 (1) The balance is 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 and caps on the Company's accumulated OCI and consolidated statement of operations (in millions): Year Ended December 31, Location 2023 2022 2021 Derivatives not designated as hedging instruments (Gain) loss recognized in income Other income, net $ 0.6 $ (0.4) $ (0.1) Gain reclassified from accumulated OCI into income (1) Other income, net $ — $ (7.5) $ — Derivatives in cash flow hedging relationships Gain (loss) recognized in OCI (effective portion) $ 16.0 $ 104.9 $ 4.8 (Gain) loss reclassified from accumulated OCI into income (effective portion) (2) Interest expense, net $ (34.7) $ 10.3 $ 24.7 (1) Gain reclassified from accumulated OCI upon de-desigation of a portion of one of the Company's interest rate caps. (2) |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2023 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic and diluted earnings per share are calculated based on the weighted-average number of shares outstanding in each period and dilutive stock options, unvested shares and warrants, to the extent such securities exist and have a dilutive effect on earnings per share. The Company computes basic and diluted earnings per share using the two-class method. The two-class method of computing earnings per share is an earnings allocation method that determines earnings per share for common shares and participating securities according to their participation rights in dividends and undistributed earnings. A reconciliation of the numerator and denominator of basic and diluted earnings per share follows (dollars in millions, except per share amounts; shares in thousands): Year Ended December 31, 2023 2022 2021 Numerator: Net loss attributable to Surgery Partners, Inc. $ (11.9) $ (54.6) $ (70.9) Less: Amounts allocated to participating securities (1) — — (10.3) Net loss attributable to common stockholders $ (11.9) $ (54.6) $ (81.2) Denominator: Weighted average common shares outstanding: Basic 125,613 91,952 72,427 Diluted (2) 125,613 91,952 72,427 Net loss per share attributable to common stockholders: Basic $ (0.09) $ (0.59) $ (1.12) Diluted (2) $ (0.09) $ (0.59) $ (1.12) Dilutive securities outstanding not included in the computation of diluted loss per share as their effect is antidilutive: Stock options 1,246 1,459 1,920 Restricted shares 263 679 1,452 (1) Includes dividends accrued for the Series A Preferred Stock. The Series A Preferred Stock does not participate in undistributed losses and was converted to common stock during the second quarter of 2021. There were no participating securities for the years ended December 31, 2023 and 2022. (2) The impact of potentially dilutive securities for all periods were not considered because the effect would be anti-dilutive. Public Offerings On November 21, 2022, the Company effected a public offering of 23,469,388 shares (the “November 2022 Firm Shares”) of the Company’s common stock, $0.01 par value per share, at a price to the public of $24.50 per share. In addition, the Company granted the underwriters an option to purchase up to an additional 3,520,408 shares of common stock and undertook a concurrent private placement to sell up to 9,183,673 shares of common stock at the same price per share as the November 2022 Firm Shares. On November 23, 2022, the Company completed the public offering pursuant to which the Company sold 26,854,796 shares of common stock (including the November 2022 Firm Shares and 3,385,408 of the option shares), resulting in gross proceeds of $657.9 million. In connection with the offering, the Company incurred underwriting discounts, commissions and other related costs of $23.0 million, which were recognized as a direct reduction of proceeds received. On December 22, 2022, the Company completed the private placement pursuant to which the Company sold 9,183,673 shares of common stock, resulting in additional gross proceeds of $225.0 million. On January 27, 2021, the Company entered into an underwriting agreement relating to a public offering of 7,500,000 shares (the “January 2021 Firm Shares”) of the Company’s common stock, $0.01 par value per share, at a price to the public of $30.25 per share. In addition, the Company granted the underwriters an option to purchase up to an additional 1,125,000 shares of common stock at the same price per share as the January 2021 Firm Shares. On February 1, 2021, the Company completed the public offering pursuant to which the Company sold 8,625,000 shares of common stock (including the January 2021 Firm Shares and the option shares), resulting in gross proceeds of $260.9 million. In connection with the offering, the Company incurred underwriting discounts, commissions and other related costs of $12.7 million, which were recognized as a direct reduction of proceeds received. On November 8, 2021, the Company entered into an underwriting agreement relating to a public offering of 6,000,000 shares (the “November 2021 Firm Shares”) of the Company’s common stock, $0.01 par value per share, at a price to the public of $46.50 per share. In addition, the Company granted the underwriters an option to purchase up to an additional 900,000 shares of common stock at the same price per share as the November 2021 Firm Shares. On November 12, 2021, the Company completed the public offering pursuant to which the Company sold 6,900,000 shares of common stock (including the November 2021 Firm Shares and the option shares), resulting in gross proceeds of $320.9 million. In connection with the offering, the Company incurred underwriting discounts, commissions and other related costs of $14.9 million, which were recognized as a direct reduction of proceeds received. Share Repurchase Authorization On December 15, 2017, the Company's Board of Directors authorized a share repurchase program of up to $50.0 million of the Company's issued and outstanding common stock from time to time. The authorization does not have a specified expiration date, and the share repurchase program may be suspended, recommenced or discontinued at any time or from time to time without prior notice. At December 31, 2023, the Company had $46.0 million of repurchase authorization available under the December 2017 authorization. The authorization does not obligate the Company to repurchase any shares, and the Company does not intend to make further repurchases. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income Taxes The Company uses the asset and liability method to account for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any change in tax rates that could impact deferred tax assets or liabilities are recognized in the same period the change occurs. If a net operating loss ("NOL") and/or interest limitation ("163(j)") carryforward exists, the Company makes a determination as to whether that NOL and/or 163(j) carryforward will be utilized in the future. A valuation allowance is established for certain NOL and 163(j) carryforwards when their recoverability is deemed to be uncertain. The carrying value of the net deferred tax assets assumes that the Company will be able to generate sufficient future taxable income in certain tax jurisdictions, based on estimates and assumptions. If these estimates and related assumptions change in the future, the Company may be required to adjust its deferred tax valuation allowances. The Company, or one or more of its subsidiaries, files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal income tax examinations for years prior to 2020 or state income tax examinations for years prior to 2019. The Company and certain of its subsidiaries file a consolidated federal income tax return. The partnerships, limited liability companies, and certain non-consolidated physician practice corporations also file separate income tax returns. The Company's allocable portion of each partnership's and limited liability company's income or loss is included in taxable income of the Company. The remaining income or loss of each partnership and limited liability company is allocated to the other owners. The Company made income tax payments of $1.4 million, $1.8 million and $1.5 million for the years ended December 31, 2023, 2022 and 2021, respectively. Income tax expense (benefit) is comprised of the following (in millions): Year Ended December 31, 2023 2022 2021 Current: Federal $ — $ — $ — State 1.4 1.5 1.5 Deferred: Federal (1.5) 17.5 7.9 State (0.2) 4.3 1.1 Total income tax (benefit) expense $ (0.3) $ 23.3 $ 10.5 A reconciliation of the provision for income taxes as reported in the consolidated statements of operations and the amount of income tax expense (benefit) computed by multiplying consolidated income (loss) in each year by the U.S. federal statutory rate of 21% follows (in millions): Year Ended December 31, 2023 2022 2021 Tax expense at U.S.federal statutory rate $ 28.4 $ 23.2 $ 17.1 State income tax, net of U.S. federal tax benefit 0.9 6.0 2.3 Change in federal valuation allowance 21.5 29.1 20.9 Net income attributable to non-controlling interests (30.9) (30.2) (29.9) Stock option compensation 0.1 (2.5) (1.7) Differences related to divested facilities (18.9) (1.4) (2.6) Tax return reconciling differences (1.0) (1.0) 1.3 Change in effective tax rate — (0.5) — Tax Receivable Agreement liability — 0.4 0.7 Adjustments to unrealized attributes — — 2.3 Other (0.4) 0.2 0.1 Total income tax (benefit) expense $ (0.3) $ 23.3 $ 10.5 The components of temporary differences and the approximate tax effects that give rise to the Company’s net deferred tax asset are as follows (in millions): December 31, 2023 2022 Deferred tax assets: Medical malpractice liability $ 3.6 $ 4.1 Accrued vacation and incentive compensation 3.0 3.1 Net operating loss carryforwards 143.6 146.0 Allowance for bad debts 1.2 2.9 Capital loss carryforwards 1.8 — Deferred financing costs 3.3 5.1 Section 163(j) interest 162.3 137.7 Interest rate derivative liability 4.7 10.5 TRA liability — 0.1 Right of use 47.2 52.5 Software development costs 1.7 1.0 Other deferred assets 9.6 9.2 Total gross deferred tax assets 382.0 372.2 Less: Valuation allowance (150.1) (114.7) Total deferred tax assets 231.9 257.5 Deferred tax liabilities: Depreciation on property and equipment (3.0) (2.0) Basis differences of partnerships and joint ventures (84.2) (87.4) Right of use (35.6) (44.4) Amortization of intangible assets (3.0) (1.3) Interest rate derivative asset (15.1) (29.5) Other deferred liabilities (1.5) (1.4) Total deferred tax liabilities (142.4) (166.0) Net deferred tax assets $ 89.5 $ 91.5 The Company had federal NOL carryforwards of $533.6 million as of December 31, 2023, of which $438.9 million expire between 2030 and 2037. The remaining federal NOL carryforwards, which were generated after 2017, do not expire. The Company had state NOL carryforwards of $588.7 million as of December 31, 2023, which expire between 2024 and 2042. The Company had Section 163(j) interest limitation carryforwards of $652.8 million as of December 31, 2023, which do not expire. The Company recorded a valuation allowance against deferred tax assets at December 31, 2023 and 2022 totaling $150.1 million and $114.7 million, respectively, which represents an increase of $35.4 million. The valuation allowance continues to be provided for certain deferred tax assets for which the Company believes it is more likely than not that the tax benefits will not be realized, which are primarily Section 163(j) interest carryforwards and certain state NOL carryforwards. The current year change in the Company’s valuation allowance is comprised of an increase of $27.1 million recorded to income tax expense and an increase of $8.3 million attributable to changes in deferred taxes on the Company’s interest rate derivatives, which was recorded to other comprehensive income. The Company has evaluated the realizability of its deferred tax assets based on sources of positive and negative evidence, and determined that it is more likely than not that its federal NOL carryforwards, as well as certain state NOL carryforwards, will be realized. The determination was made based upon projections of future book and taxable income. If the Company's expectations for future operating results on a consolidated basis or at the state jurisdiction level vary from actual results due to changes in health care regulations, general economic conditions, or other factors, the Company may need to adjust the valuation allowance, for all or a portion of its deferred tax assets. The Company's income tax expense and/or other comprehensive income in future periods will be reduced or increased to the extent of offsetting decreases or increases, respectively, in its valuation allowance in the period when the change in circumstances occurs. These changes could have a significant impact on the Company's future earnings. A reconciliation of the beginning and ending liability for gross unrecognized tax benefits for the years ended December 31, 2023 and 2022 is as follows (in millions): December 31, 2023 2022 Unrecognized tax benefits at beginning of year $ 0.1 $ 0.1 Reductions for tax positions of prior years (0.1) — Unrecognized tax benefits at end of year $ — $ 0.1 The Company recognizes interest and penalties related to uncertain tax positions in its provision for income taxes in the consolidated statements of operations. For the years ended December 31, 2023 and 2022, the Company had accrued interest and penalties related to uncertain tax positions of approximately zero and $0.1 million, respectively. The total amount of accrued liabilities related to uncertain tax positions that would affect the Company's effective tax rate, if recognized, is zero and $0.1 million as of December 31, 2023 and 2022, respectively. The reserves are included in long-term taxes payable in the consolidated balance sheet as of December 31, 2023. |
Equity-Based Compensation
Equity-Based Compensation | 12 Months Ended |
Dec. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Equity-Based Compensation | Equity-Based Compensation Transactions in which the Company receives employee and non-employee services in exchange for the Company’s equity instruments or liabilities that are based on the fair value of the Company’s equity securities or may be settled by the issuance of these securities are accounted for using a fair value method. The Company’s policy is to recognize compensation expense using the straight line method over the relevant vesting period for units that vest based on time. Equity-based awards are granted pursuant to the Surgery Partners, Inc. 2015 Omnibus Incentive Plan, as amended and restated effective January 1, 2020 ("2015 Omnibus Incentive Plan"). Under this plan, the Company can grant stock options, stock appreciation rights, restricted stock, unrestricted stock, stock units, performance awards, cash awards and other awards convertible into or otherwise based on shares of its common stock. As of December 31, 2023, 11,815,700 shares were authorized to be granted under the 2015 Omnibus Incentive Plan and 4,270,905 were available for future equity grants. Restricted and Performance Share-Based Awards During the years ended December 31, 2023 and 2022, the Company granted 505,787 and 257,291 restricted stock awards ("RSAs") to certain officers, employees and non-employee directors in accordance with the 2015 Omnibus Incentive Plan, respectively. Vesting and payment of these RSAs are generally subject to continuing service of the employee or non-employee director over the ratable vesting periods beginning one year from the date of grant to three During the years ended December 31, 2023 and 2022, the Company granted 334,275 and 203,549 performance-based restricted stock units ("PSUs") subject to the achievement of a combination of performance conditions, respectively. In addition to the achievement of the performance conditions, these PSUs are generally subject to the continuing service of the employee over the ratable vesting period from the earned date continuing for two years. For these PSUs, the number of shares payable at the end of the performance periods ranges from 0% to 300% of the targeted units based on the Company’s actual performance and/or market conditions results as compared to the targets. These PSUs are not considered outstanding until earned. During the years ended December 31, 2023 and 2022, 74,123 and 146,937 of the PSUs previously granted were deemed to have been earned, respectively. Restricted and Performance Share-Based Activity A summary of non-vested restricted share-based activity for the years ended December 31, 2023, 2022, and 2021 follows: Unvested Shares Weighted Average Grant Date Fair Value Outstanding at December 31, 2020 1,447,367 $ 9.75 Granted/Earned 1,009,085 39.90 Forfeited/Cancelled (77,844) 47.40 Vested (723,212) 42.88 Outstanding at December 31, 2021 1,655,396 $ 11.55 Granted/Earned 404,287 47.38 Forfeited/Cancelled (116,485) 39.65 Vested (947,785) 51.28 Outstanding at December 31, 2022 995,413 $ 23.87 Granted/Earned 579,910 32.54 Forfeited/Cancelled (50,158) 35.14 Vested (794,315) 32.55 Outstanding at December 31, 2023 730,850 $ 38.10 Stock Options No stock options were granted during the years ended December 31, 2023, 2022 and 2021. Options to purchase shares are granted with an exercise price equal to the fair market value of the Company’s common stock on the day of grant, based on the closing price of the Company’s common stock on the trading date immediately prior to the grant date. The estimated fair value of options is amortized to expense on a straight-line basis over the options’ vesting period. Option Valuation In applying the Monte Carlo simulation model to value the stock options, the Company used the following assumptions: ▪ Risk-free interest rate . The risk-free interest rate is used as a component of the fair value of stock options to take into account the time value of money. For the risk-free interest rate, the Company uses the implied yield on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life, in years, of the options granted. ▪ Expected volatility . Volatility, for the purpose of share-based compensation, is a measurement of the amount that a share price has fluctuated. Expected volatility involves reviewing historical volatility and determining what, if any, change the share price will have in the future. The Company used historical stock price information of certain peer group companies for a period of time equal to the expected option life period to determine estimated volatility. ▪ Expected life, in years . A clear distinction is made between the expected life of an option and the contractual term of the option. The expected life of an option is considered the amount of time, in years, that an option is expected to be outstanding before it is exercised. Whereas, the contractual term of the stock option is the term an option is valid before it expires. ▪ Expected dividend yield . Since issuing dividends will affect the fair value of a stock option, GAAP requires companies to estimate future dividend yields or payments. The Company has not historically issued dividends and does not intend to issue dividends in the future. As a result, the Company does not apply a dividend yield component to its valuation. Stock Option Activity A summary of stock option activity for the years ended December 31, 2023, 2022, and 2021 follows: Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (years) Outstanding at December 31, 2020 2,760,515 $ 12.88 8.0 Granted — Exercised (9,155) 6.28 7.7 Forfeited/Cancelled (366,500) 13.42 7.2 Outstanding at December 31, 2021 2,384,860 $ 12.82 7.0 Granted — Exercised (301,998) 13.42 6.2 Forfeited/Cancelled (134,502) 13.42 6.2 Outstanding at December 31, 2022 1,948,360 $ 12.69 5.9 Granted — Exercised (103,141) 12.92 4.0 Forfeited/Cancelled — Outstanding at December 31, 2023 (1) 1,845,219 $ 12.68 5.0 (1) All of the outstanding stock options were exercisable as of December 31, 2023. Stock Appreciation Rights As of December 31, 2023, there were 200,000 stock-settled stock appreciation right awards (the "SAR Awards") outstanding. These SAR Awards were granted on December 16, 2018. These were the only SAR Awards granted as of December 31, 2022. The SAR Awards have an exercise price of $12.90, and a remaining contractual term of 4.0 years. Fifty percent (50%) of the SAR Awards vested in five equal annual installments on each of the first five Other information pertaining to equity-based compensation At December 31, 2023, unrecognized compensation cost related to unvested shares, stock options and SAR Awards was approximately $25.7 million. Unrecognized compensation cost will be expensed annually based on the number of shares, stock options and SAR Awards that vest during the year. The Company records equity-based compensation expense to recognize the fair value of the restricted shares, stock options and SAR Awards granted over the relevant vesting period. The Company recorded equity-based compensation expense of $17.7 million, $18.4 million and $17.4 million for the years ended December 31, 2023, 2022 and 2021, respectively. |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2023 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plans | Employee Benefit Plans Surgery Partners 401(k) Plan The Surgery Partners 401(k) Plan is a defined contribution plan whereby certain employees who have completed at least one month of service, including at least one hour of service during that period of time, are eligible to participate. Employees may enroll in the plan immediately upon completion of the minimum service requirement. The Surgery Partners 401(k) Plan allows eligible employees to make contributions of varying percentages or flat dollar amounts of their annual compensation, up to the maximum allowable amounts by the Internal Revenue Service ("IRS"). Eligible employees may or may not receive a match by the Company of their contributions. Employer contributions vest incrementally over a period of five years. The Company's contributions were $12.6 million, $11.1 million and $9.7 million for the years ended December 31, 2023, 2022, and 2021, respectively. |
Other Current Liabilities
Other Current Liabilities | 12 Months Ended |
Dec. 31, 2023 | |
Other Liabilities Disclosure [Abstract] | |
Other Current Liabilities | Other Current Liabilities A summary of other current liabilities is as follows (in millions): December 31, 2023 2022 Right-of-use operating lease liabilities $ 37.6 $ 36.5 Amounts due to patients and payors 23.9 31.9 Cost report liabilities 23.9 23.5 Acquisition escrow 10.2 28.8 Interest payable 17.8 19.4 Accrued expenses and other 90.7 70.0 Total $ 204.1 $ 210.1 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Professional, General and Workers' Compensation and Cyber 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 and cyber liability insurance in excess of self-insured retentions, through third party commercial insurance carriers. Although management believes the coverage is sufficient for the Company's operations, some claims may potentially exceed the scope of coverage in effect. Plaintiffs in these matters may request punitive or other damages that may not be covered by insurance. The Company is not aware of any such proceedings that are reasonably possible to have a material adverse effect on the Company's business, financial position, results of operations or liquidity. Total professional, general and workers' compensation claim liabilities as of December 31, 2023 and 2022 were $18.2 million and $20.8 million, respectively. Expected insurance recoveries of $10.2 million and $12.7 million as of December 31, 2023 and 2022, respectively, are included as a component of other current assets and other long-term assets in the consolidated balance sheets. In May 2023, we experienced a cybersecurity incident that temporarily disrupted certain facilities in our Idaho market. We estimate that this incident had an adverse pre-tax impact of approximately $8 million as of December 31, 2023. This estimate includes lost revenue from the associated business interruption and other related expenses. We have filed a claim with the insurance carrier related to this incident. No insurance recoveries were recognized as of December 31, 2023. 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 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, representing the final payment related to the resolution of the DOJ investigation. Stockholder Litigation On December 4, 2017, a purported Company stockholder filed an action in the Delaware Court of Chancery (the "Delaware Action"). That action is captioned Witmer v. H.I.G. Capital, L.L.C., et al., C.A. No. 2017-0862. The plaintiff in the Delaware Action asserted claims against (i) certain current and former members of the Company’s Board of Directors (together, the "Directors"); (ii) H.I.G. Capital, LLC and certain of its affiliates (collectively, "H.I.G."); and (iii) Bain Capital Private Equity, L.P. and certain of its affiliates (collectively, "Bain Capital" and, together with the Directors and H.I.G., the "Defendants"). The parties to the Delaware Action negotiated a final stipulation of settlement (the “Settlement Stipulation”), which governs the terms of the settlement of the Delaware Action, and which they filed with the Court of Chancery on November 22, 2021. On February 11, 2022, the Court of Chancery approved the settlement of the Delaware Action as memorialized in the Settlement Stipulation. That decision became final and non-appealable on March 14, 2022. The case is now closed. Pursuant to the settlement, the Company received $32.8 million in March 2022, which was included in litigation settlements in the consolidated statements of operations for the year ended December 31, 2022. 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 federal physician self-referral law, or Stark Law, the statute commonly known as the federal Anti-Kickback statute, the federal False Claims Act, 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 |
Segment Reporting
Segment Reporting | 12 Months Ended |
Dec. 31, 2023 | |
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 includes the operation of ASCs, surgical hospitals and anesthesia services. The Ancillary Services segment consists of multi-specialty physician practices. The "All other" line item primarily consists of amounts attributable to the Company's corporate general and administrative functions. The following tables present financial information for each reportable segment (in millions): Year Ended December 31, 2023 2022 2021 Revenues: Surgical Facility Services $ 2,675.8 $ 2,470.4 $ 2,157.8 Ancillary Services 67.5 68.9 67.3 Total $ 2,743.3 $ 2,539.3 $ 2,225.1 Adjusted EBITDA: Surgical Facility Services $ 544.0 $ 473.6 $ 422.0 Ancillary Services (3.9) (2.3) 1.7 All other (102.0) (91.1) (84.1) Total $ 438.1 $ 380.2 $ 339.6 Reconciliation of Adjusted EBITDA: Income (loss) before income taxes $ 135.0 $ 110.3 $ 81.2 Net income attributable to non-controlling interests (147.2) (141.6) (141.6) Interest expense, net 193.0 234.9 221.0 Depreciation and amortization 118.1 114.8 98.8 Equity-based compensation expense 17.7 18.4 17.4 Transaction, integration and acquisition costs (1) 64.9 48.6 46.1 Net loss on disposals, consolidations and deconsolidations 14.4 11.1 2.2 Litigation settlements and regulatory change impact (2) 17.5 (24.7) 5.6 Loss on debt extinguishment 15.5 14.9 9.1 Undesignated derivative activity (3) 0.6 (8.0) — Other (4) 8.6 1.5 (0.2) Adjusted EBITDA $ 438.1 $ 380.2 $ 339.6 (1) This amount includes transaction and integration costs of $61.7 million, $47.5 million and $39.8 million for the years ended December 31, 2023, 2022 and 2021, respectively. This amount further includes start-up costs related to de novo surgical facilities of $3.2 million, $1.1 million and $6.3 million for the years ended December 31, 2023, 2022 and 2021, respectively. (2) This amount includes a litigation settlements loss of $10.6 million and a net gain of $29.3 million for the years ended December 31, 2023 and 2022, respectively, with no comparable costs in 2021. This amount also includes other litigation costs of $2.5 million, $4.6 million and $5.6 million for the years ended December 31, 2023, 2022 and 2021, respectively. Additionally, the year ended December 31, 2023, includes $4.4 million related to the impact of recent changes in Florida law regarding the use of letters of protection. (3) This amount includes the reclassification of $7.5 million of unrealized gains out of accumulated OCI into income related to the de-designation of a portion of one of the Company's interest rate caps for the year ended December 31, 2022. This amount further includes fair value changes of undesignated derivatives for the years ended December 31, 2023 and 2022, with no comparable activity in 2021. (4) This amount includes estimates for the net impact of the May 2023 cyber event and losses from a divested business for the year ended December 31, 2023. Amounts presented for the years ended December 31, 2022 and 2021 reflect losses incurred, net of insurance proceeds received, related to certain surgical facilities that were closed following Hurricane Ian and Hurricane Ida, respectively. December 31, 2023 2022 Assets: Surgical Facility Services $ 6,347.4 $ 6,001.1 Ancillary Services 36.3 41.7 All other 493.0 639.3 Total assets $ 6,876.7 $ 6,682.1 Year Ended December 31, 2023 2022 2021 Cash purchases of property and equipment: Surgical Facility Services $ 87.9 $ 74.3 $ 55.0 Ancillary Services 0.8 1.1 0.5 All other 0.1 5.2 2.1 Total cash purchases of property and equipment $ 88.8 $ 80.6 $ 57.6 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events During January 2024, the Company purchased a controlling interest in two ASCs and nine physician practices for $58.6 million. The Company funded the cash purchase price with available resources. As of the date of this filing, the Company has not completed its preliminary estimation of the fair values assigned to the assets acquired and liabilities assumed. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Pay vs Performance Disclosure | |||
Net Income (Loss) Attributable to Parent | $ (11.9) | $ (54.6) | $ (70.9) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Dec. 31, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Organization and Summary of A_2
Organization and Summary of Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The preparation of financial statements in conformity with generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and footnotes. Examples include, but are not limited to, estimates of accounts receivable allowances, professional and general liabilities and the estimate of deferred tax assets or liabilities. Actual results could differ from those estimates. |
Principles of Consolidation | The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, as well as interests in partnerships and limited liability companies controlled by the Company through its ownership of a majority voting interest or other rights granted to the Company by contract to manage and control the affiliate's business. All significant intercompany balances and transactions are eliminated in consolidation. |
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. Currently, several states utilize supplemental Medicaid reimbursement programs for the purpose of providing reimbursement to providers to increase base rates to the levels that Medicare would have paid for the same service or for payments that offsets a portion of the cost of providing care to Medicaid and indigent patients. These programs are designed with input from the Centers for Medicare & Medicaid Services (“CMS”) and are funded with a combination of state and federal resources, including, in certain instances, fees or taxes levied on the providers. We account for payments under these supplemental programs as variable consideration and estimate the amount using the most likely amount method. The Company recognizes this variable consideration only when it is deemed probable that a significant reversal of the cumulative revenue recognized will not occur when uncertainties associated with the variable consideration are resolved. The Company reassess its variable consideration related to these supplemental reimbursement programs when new information becomes available, such as when there are program changes or receipt of final payments. Reimbursement under these programs, including the recognition of variable consideration, is reflected in patient service revenues. Taxes or other program-related costs are reflected in other operating expenses. During the year ended December 31, 2023, the State of Idaho revised its calculation of the Upper Payer Limit ("UPL") Gap. In connection with this revision, during the year ended December 31, 2023, the Company recognized revenue and the corresponding provider tax of $17.2 million and $3.1 million, respectively, based on notification received from the State of Idaho related to the cost report year ended December 31, 2021, which reflected the revision in calculation of the UPL Gap. Since the UPL program is an ongoing program in the State of Idaho and the revised calculation has been approved by CMS for the current and future periods, during the year ended December 31, 2023, the Company recognized variable consideration and the corresponding provider tax of $34.4 million and $10.4 million, respectively, for the cost report years ended December 31, 2023 and 2022. As of December 31, 2023, the Company has recorded amounts due from third-party payors related to these supplemental reimbursement programs of $17.2 million, included in other current assets and $17.2 million, included in other long-term assets in the accompanying consolidated balance sheets. As of December 31, 2023, the Company has recorded amounts due to third-party payors related to these supplemental reimbursement programs of $5.2 million, included in other current liabilities and $5.2 million included in other long-term liabilities. There were no amounts recorded as of December 31, 2022, related to these supplemental reimbursement programs. Other service revenues. |
Accounts Receivable | Accounts Receivable Accounts receivable from third-party payors are recorded net of estimated implicit price concessions, which are estimated based on the historical trend of the Company's surgical hospitals’ cash collections and contractual write-offs, and for the Company's surgical facilities in general, established fee schedules, relationships with payors and procedure statistics. While changes in estimated reimbursement from third-party payors remain a possibility, the Company expects that any such changes would be minimal and, therefore, would not have a material effect on its financial condition or results of operations. Accounts receivable consists of receivables from federal and state agencies (under the Medicare and Medicaid programs), private insurance organizations, employers and patients. Management recognizes that revenues and receivables from government agencies are significant to the Company's operations, but it does not believe that there is significant credit risk associated with these government agencies. Concentration of credit risk with respect to other payors is limited because of the large number of such payors. The Company recognizes that final reimbursement of accounts receivable is subject to final approval by each third-party payor. However, because the Company has contracts with its third-party payors and also verifies insurance coverage of the patient before medical services are rendered, the amounts that are pending approval from third-party payors are not considered significant. Amounts are classified outside of self-pay if the Company has an agreement with the third-party payor or has verified a patient’s coverage prior to services rendered. The Company's policy is to collect co-payments and deductibles prior to providing medical services. Patient services of the Company are primarily non-emergency, which allows the surgical facilities to control the procedures for which third-party reimbursement is sought and obtained. The Company does not require collateral from self-pay patients. The Company's collection policies and procedures are based on the type of payor, size of claim and estimated collection percentage for each patient account. The Company analyzes accounts receivable at each of its surgical facilities to ensure the proper collection and aged category. Collection efforts include direct contact with third-party payors or patients, written correspondence and the use of legal or collection agency assistance, as required. |
Impairment of Long-Lived Assets, Goodwill and Intangible Assets | Impairment of Long-Lived Assets, Goodwill and Intangible Assets |
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 risks, 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 | Non-Controlling Interests The physician limited partners and physician minority members of the entities that the Company controls are responsible for the supervision and delivery of medical services. The governance rights of limited partners and minority members are restricted to those that protect their financial interests. Under certain partnership and operating agreements governing these partnerships and limited liability companies, the Company could be removed as the sole general partner or managing member for certain events such as material breach of the partnership or operating agreement, gross negligence or bankruptcy. These protective rights do not preclude consolidation of the respective partnerships and limited liability companies. Ownership interests in consolidated subsidiaries held by parties other than the Company are identified and generally presented in the consolidated financial statements within the equity section but separate from the Company's equity. However, in instances in which certain redemption features that are not solely within the control of the Company are present, classification of non-controlling interests outside of permanent equity is required. Consolidated net income attributable to the Company and to the non-controlling interests are identified and presented on the consolidated statements of operations; changes in ownership interests in which the Company retains a controlling interest are accounted for as equity transactions assuming the Company continues to consolidate related entities. Certain transactions with non-controlling interests are classified within financing activities in the consolidated statements of cash flows. The consolidated financial statements of the Company include all assets, liabilities, revenues and expenses of surgical facilities in which the Company has sufficient ownership and rights to allow the Company to consolidate the surgical facilities. Similar to its investments in non-consolidated affiliates, the Company regularly engages in the purchase and sale of ownership interests with respect to its consolidated subsidiaries that do not result in a change of control. Non-Controlling Interests — Redeemable. Each partnership and limited liability company through which the Company owns and operates its surgical facilities is governed by a partnership or operating agreement, respectively. In certain circumstances, the applicable partnership or operating agreements for the Company's surgical facilities provide that the facilities will purchase all of the physician limited partners’ or physician minority members’, as applicable, ownership if certain adverse regulatory events occur, such as it becoming illegal for the physician(s) to own an interest in a surgical facility, refer patients to a surgical facility or receive cash distributions from a surgical facility. The Company believes the likelihood of an event occurring that would trigger such purchases was remote as of December 31, 2023. The non-controlling interests — redeemable are reported outside of stockholders' equity in the consolidated balance sheets. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with remaining stated maturities 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. |
Inventories | Inventories Inventories, which consist primarily of medical and drug supplies, are stated at the lower of cost or market value. Cost is determined using the first-in, first-out method. |
Investments in Unconsolidated Affiliates | Investments in Unconsolidated Affiliates Investments in unconsolidated affiliates in which the Company exerts significant influence but does not control or otherwise consolidate are accounted for using the equity method. Equity method investments are initially recorded at cost, unless there is a deconsolidation where the investments are a result of the Company no longer having control of a previously controlled entity but still retaining a non-controlling interest. The Company had two such deconsolidations during the year ended December 31, 2022 but none during the year ended December 31, 2023. These investments are included as investments in and advances to affiliates in the accompanying consolidated balance sheets. The Company’s share of the profits and losses from these investments is reported in income from equity investments in the accompanying consolidated statements of operations. The Company monitors its investments for other-than-temporary impairment by considering factors such as current economic and market conditions and the operating performance of the investees and records reductions in carrying values when necessary. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The fair value of a financial instrument is the amount at which the instrument could be exchanged in an orderly transaction between market participants to sell the asset or transfer the liability. The Company uses fair value measurements based on inputs classified into the following hierarchy: • Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities. • Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These may include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. • Level 3: Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, depending on the nature of the item being valued. The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable and accounts payable approximate their fair values under Level 3 calculations. 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. |
Variable Interest Entities | Variable Interest Entities The consolidated financial statements include the accounts of variable interest entities ("VIE") in which the Company is the primary beneficiary under the provisions of the Financial Accounting Standards Board's ("FASB") Accounting Standards Codification 810, " Consolidation" |
Professional and General and Workers' Compensation Insurance | Professional and General and Workers' Compensation Insurance The Company maintains general liability and professional liability insurance in excess of self-insured retentions through third party commercial insurance carriers in amounts that management believes is sufficient for the Company's operations, although, potentially, some claims may exceed the scope of coverage in effect. The professional liability insurance coverage is on a claims-made basis and the general liability insurance is on an occurrence basis. The Company also maintains workers' compensation insurance, subject to a self-insured retention. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In November 2023, the FASB issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures , which requires enhanced disclosures of significant segment expenses. The ASU is effective for annual periods beginning after December 15, 2023 and interim periods beginning after December 15, 2024. The amendments in this ASU must be applied retrospectively to all periods presented and early adoption is permitted. The Company is evaluating the impact of this ASU on its consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures , which establishes new requirements for the categorization and disaggregation of information in the rate reconciliation as well as for disaggregation of income taxes paid. The ASU is effective for annual periods beginning after December 15, 2024 and interim periods beginning after December 15, 2025. The amendments in this ASU may be applied prospectively or retrospectively to all periods presented and early adoption is permitted. The Company is evaluating the impact of this ASU on its consolidated financial statements. |
Acquisitions and Dispositions | Acquisitions, Disposals and Deconsolidations The Company accounts for all transactions that represent business combinations using the acquisition method of accounting, where the identifiable assets acquired, liabilities assumed and any non-controlling interest in the acquired entity are recognized and measured at their fair values on the date the Company obtains control in the acquiree. The fair values assigned to certain assets acquired and liabilities assumed that are not finalized for reporting periods following the acquisition date are estimated on a preliminary basis and are subject to adjustment as new facts and circumstances emerge that were present at the date of acquisition. Such adjustments are recorded as soon as practical and within the measurement period (defined as the date through which all information required to identify and measure the consideration transferred, assets acquired, liabilities assumed and any non-controlling interests has been obtained, limited to one year from the acquisition date). Goodwill is determined as the excess of the fair value of the consideration conveyed plus the fair value of any non-controlling interests in the acquisition over the fair value of the net assets acquired. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost or, if obtained through acquisition, at fair value determined on the date of acquisition. Depreciation is recognized using the straight-line method over the estimated useful lives of the assets, generally 20 to 40 years for buildings and building improvements, three five The Company also leases certain facilities and equipment under finance leases. Assets held under finance leases are stated at the present value of lease payments at the inception of the related lease. Such assets are amortized on a straight-line basis over the lesser of the lease term or the remaining useful life of the leased asset. |
Goodwill and Intangible Assets | Goodwill Goodwill represents the fair value of the consideration provided in an acquisition over the fair value of net assets acquired and is not amortized. The Company tests its goodwill for impairment in the fourth quarter of each year, or more frequently if certain indicators arise. The Company tests for goodwill impairment at the reporting unit level, which is defined as one level below an operating segment. During 2023, the Company identified two reporting units, which include the following: 1) Surgical Facilities and 2) Ancillary Services. The Company compares the carrying value of the net assets of the reporting unit to the estimated fair value of the reporting unit. To determine the fair value of the reporting units, the Company obtained valuations at the reporting unit level prepared by third-party valuation specialists which typically utilizes a combination of the income and market approaches. Intangible Assets The Company has indefinite-lived intangible assets related to the certificates of need held in jurisdictions where certain of its surgical facilities are located, Medicare licenses and certain management rights agreements. The Company tests these intangible assets for impairment in the fourth quarter of each year, or more frequently if certain indicators arise. The Company also has finite-lived intangible assets related to physician guarantee agreements, non-compete agreements and management rights agreements. Physician guarantees are amortized into salaries and benefits costs in the consolidated statements of operations over the commitment period of the contract, generally two two |
Leases | Leases The Company determines if an arrangement is a lease at inception. Right-of-use assets represent the right to use the underlying assets for the lease term and the lease liabilities represent the obligation to make lease payments arising from the leases. Right-of-use assets and liabilities are recognized at commencement date based on the present value of future lease payments over the lease term, which includes only payments that are fixed and determinable at the time of commencement. When readily determinable, the Company uses the interest rate implicit in a lease to determine the present value of future lease payments. For leases where the implicit rate is not readily determinable, the Company's incremental borrowing rate is used. The Company calculates its incremental borrowing rate on a periodic basis using a third-party financial model that estimates the rate of interest the Company would have to pay to borrow an amount equal to the total lease payments on a collateralized basis over a term similar to the lease. The Company applies its incremental borrowing rate using a portfolio approach. The right-of-use asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. The Company's operating leases are primarily for real estate, including medical office buildings, and corporate and other administrative offices. The Company's finance leases are primarily for medical equipment and information technology and telecommunications assets. The Company's finance leases also include certain land, buildings and improvements as discussed in Note 3. "Property and Equipment." Real estate lease agreements typically have initial terms of ten years and may include one or more options to renew. Certain leases also include options to purchase the leased property. The useful life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. The majority of the Company's medical equipment leases have a bargain purchase option that is reasonably certain of exercise, so these assets are depreciated over their useful life. The Company's lease agreements do not contain any material residual value guarantees, restrictions or covenants. Certain of the Company's lease agreements require the Company to pay common area maintenance, repairs, property taxes and insurance costs, which are variable amounts based on actual costs incurred during each applicable period. Certain lease agreements also include escalating rent payments that are not fixed at commencement but are based on an index that is determined in future periods over the lease term based on changes in the Consumer Price Index or other measure of cost inflation. These variable components of lease payments are expensed as incurred and are not included in the determination of the right-of-use asset or lease liability. |
Earnings Per Share | Earnings Per ShareBasic and diluted earnings per share are calculated based on the weighted-average number of shares outstanding in each period and dilutive stock options, unvested shares and warrants, to the extent such securities exist and have a dilutive effect on earnings per share. The Company computes basic and diluted earnings per share using the two-class method. The two-class method of computing earnings per share is an earnings allocation method that determines earnings per share for common shares and participating securities according to their participation rights in dividends and undistributed earnings. |
Income Taxes | Income Taxes The Company uses the asset and liability method to account for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any change in tax rates that could impact deferred tax assets or liabilities are recognized in the same period the change occurs. If a net operating loss ("NOL") and/or interest limitation ("163(j)") carryforward exists, the Company makes a determination as to whether that NOL and/or 163(j) carryforward will be utilized in the future. A valuation allowance is established for certain NOL and 163(j) carryforwards when their recoverability is deemed to be uncertain. The carrying value of the net deferred tax assets assumes that the Company will be able to generate sufficient future taxable income in certain tax jurisdictions, based on estimates and assumptions. If these estimates and related assumptions change in the future, the Company may be required to adjust its deferred tax valuation allowances. The Company, or one or more of its subsidiaries, files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal income tax examinations for years prior to 2020 or state income tax examinations for years prior to 2019. The Company and certain of its subsidiaries file a consolidated federal income tax return. The partnerships, limited liability companies, and certain non-consolidated physician practice corporations also file separate income tax returns. The Company's allocable portion of each partnership's and limited liability company's income or loss is included in taxable income of the Company. The remaining income or loss of each partnership and limited liability company is allocated to the other owners. |
Equity-Based Compensation | Equity-Based CompensationTransactions in which the Company receives employee and non-employee services in exchange for the Company’s equity instruments or liabilities that are based on the fair value of the Company’s equity securities or may be settled by the issuance of these securities are accounted for using a fair value method. The Company’s policy is to recognize compensation expense using the straight line method over the relevant vesting period for units that vest based on time. |
Organization and Summary of A_3
Organization and Summary of Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Revenues | The following table presents a summary of revenues by service type as a percentage of total revenues: Year Ended December 31, 2023 2022 2021 Patient service revenues: Surgical facilities revenues 96.0 % 95.8 % 95.7 % Ancillary services revenues 2.4 % 2.7 % 3.0 % Total patient service revenues 98.4 % 98.5 % 98.7 % Other service revenues 1.6 % 1.5 % 1.3 % Total revenues 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): Year Ended December 31, 2023 2022 2021 Amount % Amount % Amount % Patient service revenues: Private insurance $ 1,418.6 52.5 % $ 1,288.0 51.5 % $ 1,110.1 50.6 % Government 1,128.1 41.8 % 1,059.2 42.3 % 949.9 43.3 % Self-pay 68.1 2.5 % 65.9 2.6 % 61.1 2.8 % Other (1) 85.6 3.2 % 89.0 3.6 % 73.9 3.3 % Total patient service revenues 2,700.4 100.0 % 2,502.1 100.0 % 2,195.0 100.0 % Other service revenues (2) 42.9 37.2 30.1 Total revenues $ 2,743.3 $ 2,539.3 $ 2,225.1 (1) Other is comprised of anesthesia service agreements, automobile liability, letters of protection and other payor types. (2) Includes amounts attributable to related parties of $18.4 million, $15.7 million and $9.3 million for the years ended December 31, 2023, 2022 and 2021, respectively. |
Schedule of Rollforward of Non-Controlling Interests - Redeemable | A summary of activity related to redeemable non-controlling interests for the years ended December 31, 2023 and 2022 is as follows (in millions): December 31, 2023 2022 Balance at beginning of period $ 342.0 $ 330.2 Net income attributable to non-controlling interests—redeemable 37.8 44.5 Acquisition and disposal of shares of non-controlling interests, net—redeemable (9.3) 10.4 Distributions to non-controlling interest —redeemable holders (43.1) (43.1) Balance at end of period $ 327.4 $ 342.0 |
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 December 31, December 31, 2023 2022 2023 2022 Senior secured term loan $ 1,398.4 $ 1,370.0 $ 1,401.9 $ 1,359.7 6.750% senior unsecured notes due 2025 $ 185.0 $ 185.0 $ 183.2 $ 183.4 10.000% senior unsecured notes due 2027 $ 320.0 $ 320.0 $ 321.2 $ 326.8 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | A summary of property and equipment follows (in millions): December 31, 2023 2022 Land $ 9.2 $ 11.1 Buildings and improvements 225.3 164.0 Furniture and equipment 29.5 26.7 Computer and software 108.5 96.6 Medical equipment 310.1 263.1 Right-of-use finance lease assets 716.3 631.3 Construction in progress 24.2 58.1 Property and equipment, at cost 1,423.1 1,250.9 Less: Accumulated depreciation (454.4) (374.3) Property and equipment, net $ 968.7 $ 876.6 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Activity Related to Goodwill | A summary of the changes in the carrying amount of goodwill follows (in millions): December 31, 2023 2022 Balance at beginning of period $ 4,137.1 $ 3,911.8 Acquisitions, including post acquisition adjustments 225.9 269.7 Disposals and deconsolidations (37.0) (44.4) Balance at end of period $ 4,326.0 $ 4,137.1 |
Schedule of Components of Indefinite-Lived Intangible Assets | A summary of the components of intangible assets follows (in millions): December 31, 2023 December 31, 2022 Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Finite-lived intangible assets: Management rights agreements $ 42.8 $ (12.0) $ 30.8 $ 23.9 $ (10.2) $ 13.7 Other 30.0 (20.6) 9.4 28.5 (14.9) 13.6 Total finite-lived intangible assets 72.8 (32.6) 40.2 52.4 (25.1) 27.3 Indefinite-lived intangible assets 14.6 — 14.6 15.0 — 15.0 Total intangible assets $ 87.4 $ (32.6) $ 54.8 $ 67.4 $ (25.1) $ 42.3 |
Schedule of Components of Finite-Lived Intangible Assets | A summary of the components of intangible assets follows (in millions): December 31, 2023 December 31, 2022 Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Finite-lived intangible assets: Management rights agreements $ 42.8 $ (12.0) $ 30.8 $ 23.9 $ (10.2) $ 13.7 Other 30.0 (20.6) 9.4 28.5 (14.9) 13.6 Total finite-lived intangible assets 72.8 (32.6) 40.2 52.4 (25.1) 27.3 Indefinite-lived intangible assets 14.6 — 14.6 15.0 — 15.0 Total intangible assets $ 87.4 $ (32.6) $ 54.8 $ 67.4 $ (25.1) $ 42.3 |
Schedule of Amortization Expense | Total estimated amortization expense for the next five years and thereafter related to intangible assets follows (in millions): 2024 $ 5.8 2025 5.3 2026 5.0 2027 3.8 2028 3.3 Thereafter 17.0 Total $ 40.2 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt | A summary of long-term debt follows (in millions): December 31, 2023 2022 Senior secured term loan (1) $ 1,398.4 $ 1,370.0 Senior secured revolving credit facility — — 6.750% senior unsecured notes due 2025 185.0 185.0 10.000% senior unsecured notes due 2027 320.0 320.0 Notes payable and other secured loans 205.2 171.3 Finance lease obligations 693.6 585.7 Less: unamortized debt issuance costs and discounts (27.1) (10.2) Total debt 2,775.1 2,621.8 Less: current maturities 73.3 62.8 Total long-term debt $ 2,701.8 $ 2,559.0 (1) Includes unamortized fair value discount of $1.6 million and $2.1 million as of December 31, 2023 and 2022, respectively. |
Schedule of Debt Redemption Percentages | The Company may redeem the 2027 Unsecured Notes, in whole or in part, at the redemption prices set forth below (expressed as a percentage of the principal amount of notes to be redeemed), plus accrued and unpaid interest, if any, up to, but excluding, the date of redemption: April 15, 2023 to April 14, 2024 102.500 % April 15, 2024 and thereafter 100.000 % |
Schedule of Maturities of Debt | A summary of maturities for the Company's long-term debt, excluding unamortized debt issuance costs and the unamortized fair value discount discussed above, for the next five years and thereafter as of December 31, 2023 follows (in millions): 2024 $ 73.3 2025 264.8 2026 62.6 2027 376.4 2028 51.1 Thereafter 1,975.6 Total $ 2,803.8 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Leases [Abstract] | |
Schedule of Components of Right-of-use Assets and Liabilities Related to Leases | The following table presents the components of the Company's right-of-use assets and liabilities related to leases and their classification in the consolidated balance sheets at December 31, 2023 and 2022 (in millions): Classification in Consolidated Balance Sheets December 31, 2023 December 31, 2022 Assets: Operating lease assets Right-of-use operating lease assets $ 255.3 $ 279.1 Finance lease assets Property and equipment, net of accumulated depreciation 587.0 529.6 Total leased assets $ 842.3 $ 808.7 Liabilities: Operating lease liabilities: Current Other current liabilities $ 37.6 $ 36.5 Long-term Right-of-use operating lease liabilities 248.9 271.4 Total operating lease liabilities 286.5 307.9 Finance lease liabilities: Current Current maturities of long-term debt 25.4 20.9 Long-term Long-term debt, less current maturities 668.2 564.8 Total finance lease liabilities 693.6 585.7 Total lease liabilities $ 980.1 $ 893.6 The following table presents the weighted-average lease terms and discount rates at December 31, 2023 and 2022 (in millions): December 31, 2023 December 31, 2022 Operating Leases Finance Leases Operating Leases Finance Leases Weighted-average remaining lease term 9.2 years 20.5 years 9.2 years 20.7 years Weight average discount rate 8.2 % 8.2 % 9.1 % 8.8 % |
Schedule of Lease Expense and Cash Flow Information | The following table presents the components of the Company's lease expense and their classification in the consolidated statement of operations for the years ended December 31, 2023 and 2022 (in millions): December 31, 2023 December 31, 2022 Operating lease costs $ 65.7 $ 65.5 Finance lease costs: Amortization of leased assets 39.9 38.8 Interest on lease liabilities 48.6 42.7 Total finance lease costs 88.5 81.5 Variable and short-term lease costs 20.1 18.5 Total lease costs $ 174.3 $ 165.5 The following table presents supplemental cash flow information for the years ended December 31, 2023 and 2022 (dollars in millions): December 31, 2023 December 31, 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows from operating leases $ 63.7 $ 63.2 Operating cash outflows from finance leases 45.8 41.7 Financing cash outflows from finance leases 26.7 24.6 Right-of-use assets obtained in exchange for lease obligations: Operating leases 60.1 57.3 Finance leases 167.5 180.2 |
Schedule of Maturity of Operating Leases | Future maturities of lease liabilities at December 31, 2023 are presented in the following table (in millions): Operating Leases Finance Leases 2023 $ 59.1 $ 77.2 2024 54.6 75.6 2025 50.6 72.8 2026 42.6 69.1 2027 33.1 65.2 Thereafter 169.7 1,220.6 Total lease payments 409.7 1,580.5 Less: imputed interest (123.2) (886.9) Total lease obligations $ 286.5 $ 693.6 |
Schedule of Maturity of Finance Leases | Future maturities of lease liabilities at December 31, 2023 are presented in the following table (in millions): Operating Leases Finance Leases 2023 $ 59.1 $ 77.2 2024 54.6 75.6 2025 50.6 72.8 2026 42.6 69.1 2027 33.1 65.2 Thereafter 169.7 1,220.6 Total lease payments 409.7 1,580.5 Less: imputed interest (123.2) (886.9) Total lease obligations $ 286.5 $ 693.6 |
Derivatives and Hedging Activ_2
Derivatives and Hedging Activities (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Interest Rate Swaps and Interest Rate Caps Outstanding | The key terms of interest rate swaps and interest rate caps outstanding are presented below: December 31, 2023 December 31, 2022 Description Effective Date Notional Amount (in millions) Status Notional Amount (in millions) Status Maturity Date Pay-fixed swap May 7, 2021 $ 435.0 Active $ 435.0 Active March 31, 2025 Pay-fixed swap May 7, 2021 330.0 Active 330.0 Active March 31, 2025 Pay-fixed swap May 7, 2021 435.0 Active 435.0 Active March 31, 2025 Interest rate cap September 30, 2021 151.4 Active 159.1 Active March 31, 2025 Interest rate cap September 30, 2021 8.7 Active 159.1 Active March 31, 2025 Pay-fixed swap November 30, 2018 — Matured 165.0 Active November 30, 2023 Pay-fixed swap November 30, 2018 — Matured 120.0 Active November 30, 2023 Pay-fixed swap June 28, 2019 — Matured 150.0 Active November 30, 2023 Receive-fixed swap April 30, 2021 — Matured (165.0) Active November 30, 2023 Receive-fixed swap April 30, 2021 — Matured (120.0) Active November 30, 2023 Receive-fixed swap April 30, 2021 — Matured (150.0) Active November 30, 2023 $ 1,360.1 $ 1,518.2 |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The following table presents the fair values of our derivatives and their location on the consolidated balance sheets (in millions): December 31, 2023 December 31, 2022 Location Assets Liabilities Assets Liabilities Derivatives not designated as hedging instruments Interest rate caps Other long-term assets $ — $ — $ 9.0 $ — Interest rate swaps Other long-term assets — — 8.5 — Interest rate swaps Other long-term liabilities — — — 8.5 Derivatives in cash flow hedging relationships Interest rate caps Other long-term assets 6.0 — 10.4 — Interest rate swaps Other long-term assets 51.4 — 85.5 — Interest rate swaps Other long-term liabilities (1) — 17.8 — 31.9 Total $ 57.4 $ 17.8 $ 113.4 $ 40.4 (1) The balance is 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 and caps on the Company's accumulated OCI and consolidated statement of operations (in millions): Year Ended December 31, Location 2023 2022 2021 Derivatives not designated as hedging instruments (Gain) loss recognized in income Other income, net $ 0.6 $ (0.4) $ (0.1) Gain reclassified from accumulated OCI into income (1) Other income, net $ — $ (7.5) $ — Derivatives in cash flow hedging relationships Gain (loss) recognized in OCI (effective portion) $ 16.0 $ 104.9 $ 4.8 (Gain) loss reclassified from accumulated OCI into income (effective portion) (2) Interest expense, net $ (34.7) $ 10.3 $ 24.7 (1) Gain reclassified from accumulated OCI upon de-desigation of a portion of one of the Company's interest rate caps. (2) |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Reconciliation of Numerator and Denominator of Basic and Diluted Earnings per Share | A reconciliation of the numerator and denominator of basic and diluted earnings per share follows (dollars in millions, except per share amounts; shares in thousands): Year Ended December 31, 2023 2022 2021 Numerator: Net loss attributable to Surgery Partners, Inc. $ (11.9) $ (54.6) $ (70.9) Less: Amounts allocated to participating securities (1) — — (10.3) Net loss attributable to common stockholders $ (11.9) $ (54.6) $ (81.2) Denominator: Weighted average common shares outstanding: Basic 125,613 91,952 72,427 Diluted (2) 125,613 91,952 72,427 Net loss per share attributable to common stockholders: Basic $ (0.09) $ (0.59) $ (1.12) Diluted (2) $ (0.09) $ (0.59) $ (1.12) Dilutive securities outstanding not included in the computation of diluted loss per share as their effect is antidilutive: Stock options 1,246 1,459 1,920 Restricted shares 263 679 1,452 (1) Includes dividends accrued for the Series A Preferred Stock. The Series A Preferred Stock does not participate in undistributed losses and was converted to common stock during the second quarter of 2021. There were no participating securities for the years ended December 31, 2023 and 2022. (2) The impact of potentially dilutive securities for all periods were not considered because the effect would be anti-dilutive. |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Tax Expense (Benefit) | Income tax expense (benefit) is comprised of the following (in millions): Year Ended December 31, 2023 2022 2021 Current: Federal $ — $ — $ — State 1.4 1.5 1.5 Deferred: Federal (1.5) 17.5 7.9 State (0.2) 4.3 1.1 Total income tax (benefit) expense $ (0.3) $ 23.3 $ 10.5 |
Schedule of Effective Income Tax Rate Reconciliation | A reconciliation of the provision for income taxes as reported in the consolidated statements of operations and the amount of income tax expense (benefit) computed by multiplying consolidated income (loss) in each year by the U.S. federal statutory rate of 21% follows (in millions): Year Ended December 31, 2023 2022 2021 Tax expense at U.S.federal statutory rate $ 28.4 $ 23.2 $ 17.1 State income tax, net of U.S. federal tax benefit 0.9 6.0 2.3 Change in federal valuation allowance 21.5 29.1 20.9 Net income attributable to non-controlling interests (30.9) (30.2) (29.9) Stock option compensation 0.1 (2.5) (1.7) Differences related to divested facilities (18.9) (1.4) (2.6) Tax return reconciling differences (1.0) (1.0) 1.3 Change in effective tax rate — (0.5) — Tax Receivable Agreement liability — 0.4 0.7 Adjustments to unrealized attributes — — 2.3 Other (0.4) 0.2 0.1 Total income tax (benefit) expense $ (0.3) $ 23.3 $ 10.5 |
Schedule of Deferred Tax Assets and Liabilities | The components of temporary differences and the approximate tax effects that give rise to the Company’s net deferred tax asset are as follows (in millions): December 31, 2023 2022 Deferred tax assets: Medical malpractice liability $ 3.6 $ 4.1 Accrued vacation and incentive compensation 3.0 3.1 Net operating loss carryforwards 143.6 146.0 Allowance for bad debts 1.2 2.9 Capital loss carryforwards 1.8 — Deferred financing costs 3.3 5.1 Section 163(j) interest 162.3 137.7 Interest rate derivative liability 4.7 10.5 TRA liability — 0.1 Right of use 47.2 52.5 Software development costs 1.7 1.0 Other deferred assets 9.6 9.2 Total gross deferred tax assets 382.0 372.2 Less: Valuation allowance (150.1) (114.7) Total deferred tax assets 231.9 257.5 Deferred tax liabilities: Depreciation on property and equipment (3.0) (2.0) Basis differences of partnerships and joint ventures (84.2) (87.4) Right of use (35.6) (44.4) Amortization of intangible assets (3.0) (1.3) Interest rate derivative asset (15.1) (29.5) Other deferred liabilities (1.5) (1.4) Total deferred tax liabilities (142.4) (166.0) Net deferred tax assets $ 89.5 $ 91.5 |
Schedule of Unrecognized Tax Benefits Roll Forward | A reconciliation of the beginning and ending liability for gross unrecognized tax benefits for the years ended December 31, 2023 and 2022 is as follows (in millions): December 31, 2023 2022 Unrecognized tax benefits at beginning of year $ 0.1 $ 0.1 Reductions for tax positions of prior years (0.1) — Unrecognized tax benefits at end of year $ — $ 0.1 |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Restricted and Performance Share-Based Activity | A summary of non-vested restricted share-based activity for the years ended December 31, 2023, 2022, and 2021 follows: Unvested Shares Weighted Average Grant Date Fair Value Outstanding at December 31, 2020 1,447,367 $ 9.75 Granted/Earned 1,009,085 39.90 Forfeited/Cancelled (77,844) 47.40 Vested (723,212) 42.88 Outstanding at December 31, 2021 1,655,396 $ 11.55 Granted/Earned 404,287 47.38 Forfeited/Cancelled (116,485) 39.65 Vested (947,785) 51.28 Outstanding at December 31, 2022 995,413 $ 23.87 Granted/Earned 579,910 32.54 Forfeited/Cancelled (50,158) 35.14 Vested (794,315) 32.55 Outstanding at December 31, 2023 730,850 $ 38.10 |
Schedule of Stock Options Activity | A summary of stock option activity for the years ended December 31, 2023, 2022, and 2021 follows: Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (years) Outstanding at December 31, 2020 2,760,515 $ 12.88 8.0 Granted — Exercised (9,155) 6.28 7.7 Forfeited/Cancelled (366,500) 13.42 7.2 Outstanding at December 31, 2021 2,384,860 $ 12.82 7.0 Granted — Exercised (301,998) 13.42 6.2 Forfeited/Cancelled (134,502) 13.42 6.2 Outstanding at December 31, 2022 1,948,360 $ 12.69 5.9 Granted — Exercised (103,141) 12.92 4.0 Forfeited/Cancelled — Outstanding at December 31, 2023 (1) 1,845,219 $ 12.68 5.0 (1) |
Other Current Liabilities (Tabl
Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Other Liabilities Disclosure [Abstract] | |
Summary of Other Current Liabilities | A summary of other current liabilities is as follows (in millions): December 31, 2023 2022 Right-of-use operating lease liabilities $ 37.6 $ 36.5 Amounts due to patients and payors 23.9 31.9 Cost report liabilities 23.9 23.5 Acquisition escrow 10.2 28.8 Interest payable 17.8 19.4 Accrued expenses and other 90.7 70.0 Total $ 204.1 $ 210.1 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Segment Revenue and Operating Income | The following tables present financial information for each reportable segment (in millions): Year Ended December 31, 2023 2022 2021 Revenues: Surgical Facility Services $ 2,675.8 $ 2,470.4 $ 2,157.8 Ancillary Services 67.5 68.9 67.3 Total $ 2,743.3 $ 2,539.3 $ 2,225.1 Adjusted EBITDA: Surgical Facility Services $ 544.0 $ 473.6 $ 422.0 Ancillary Services (3.9) (2.3) 1.7 All other (102.0) (91.1) (84.1) Total $ 438.1 $ 380.2 $ 339.6 Reconciliation of Adjusted EBITDA: Income (loss) before income taxes $ 135.0 $ 110.3 $ 81.2 Net income attributable to non-controlling interests (147.2) (141.6) (141.6) Interest expense, net 193.0 234.9 221.0 Depreciation and amortization 118.1 114.8 98.8 Equity-based compensation expense 17.7 18.4 17.4 Transaction, integration and acquisition costs (1) 64.9 48.6 46.1 Net loss on disposals, consolidations and deconsolidations 14.4 11.1 2.2 Litigation settlements and regulatory change impact (2) 17.5 (24.7) 5.6 Loss on debt extinguishment 15.5 14.9 9.1 Undesignated derivative activity (3) 0.6 (8.0) — Other (4) 8.6 1.5 (0.2) Adjusted EBITDA $ 438.1 $ 380.2 $ 339.6 (1) This amount includes transaction and integration costs of $61.7 million, $47.5 million and $39.8 million for the years ended December 31, 2023, 2022 and 2021, respectively. This amount further includes start-up costs related to de novo surgical facilities of $3.2 million, $1.1 million and $6.3 million for the years ended December 31, 2023, 2022 and 2021, respectively. (2) This amount includes a litigation settlements loss of $10.6 million and a net gain of $29.3 million for the years ended December 31, 2023 and 2022, respectively, with no comparable costs in 2021. This amount also includes other litigation costs of $2.5 million, $4.6 million and $5.6 million for the years ended December 31, 2023, 2022 and 2021, respectively. Additionally, the year ended December 31, 2023, includes $4.4 million related to the impact of recent changes in Florida law regarding the use of letters of protection. (3) This amount includes the reclassification of $7.5 million of unrealized gains out of accumulated OCI into income related to the de-designation of a portion of one of the Company's interest rate caps for the year ended December 31, 2022. This amount further includes fair value changes of undesignated derivatives for the years ended December 31, 2023 and 2022, with no comparable activity in 2021. (4) This amount includes estimates for the net impact of the May 2023 cyber event and losses from a divested business for the year ended December 31, 2023. Amounts presented for the years ended December 31, 2022 and 2021 reflect losses incurred, net of insurance proceeds received, related to certain surgical facilities that were closed following Hurricane Ian and Hurricane Ida, respectively. |
Schedule of Reconciliation of Assets from Segment to Consolidated | December 31, 2023 2022 Assets: Surgical Facility Services $ 6,347.4 $ 6,001.1 Ancillary Services 36.3 41.7 All other 493.0 639.3 Total assets $ 6,876.7 $ 6,682.1 |
Schedule of Financial Information by Reportable Segment | Year Ended December 31, 2023 2022 2021 Cash purchases of property and equipment: Surgical Facility Services $ 87.9 $ 74.3 $ 55.0 Ancillary Services 0.8 1.1 0.5 All other 0.1 5.2 2.1 Total cash purchases of property and equipment $ 88.8 $ 80.6 $ 57.6 |
Organization and Summary of A_4
Organization and Summary of Accounting Policies - Narrative (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 USD ($) state facility | Dec. 31, 2022 USD ($) integer | Dec. 31, 2021 USD ($) | |
Product Information [Line Items] | |||
Number of surgical facilities owned | facility | 162 | ||
Number of states in which entity operates | state | 33 | ||
Number of surgical facilities owned, majority interest | facility | 90 | ||
Number of surgical facilities owned, consolidated | facility | 123 | ||
Revenues | $ 2,743.3 | $ 2,539.3 | $ 2,225.1 |
Other current assets | 96.5 | 79 | |
Other long-term assets | 103.3 | 144.2 | |
Other current liabilities | 204.1 | 210.1 | |
Other long-term liabilities | 41.1 | $ 75.4 | |
Number of deconsolidations | integer | 2 | ||
Third-Party Payors, Supplemental Reimbursement Programs | |||
Product Information [Line Items] | |||
Other current assets | 17.2 | ||
Other long-term assets | 17.2 | ||
Other current liabilities | 5.2 | ||
Other long-term liabilities | 5.2 | ||
2021 Cost Report | Idaho | |||
Product Information [Line Items] | |||
Revenues | 17.2 | ||
Provider taxes | 3.1 | ||
2023 and 2022 Cost Report | |||
Product Information [Line Items] | |||
Revenues | 34.4 | ||
Provider taxes | $ 10.4 | ||
Facilities, Ambulatory Surgery Centers | |||
Product Information [Line Items] | |||
Number of surgical facilities owned | facility | 144 | ||
Facilities, Surgical Hospitals | |||
Product Information [Line Items] | |||
Number of surgical facilities owned | facility | 18 |
Organization and Summary of A_5
Organization and Summary of Accounting Policies - Revenues by Service Type (Details) - Revenue Source - Revenue | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Revenue from External Customer [Line Items] | |||
Revenue by service type as a proportion of total revenues (percent) | 100% | 100% | 100% |
Patent service revenues | |||
Revenue from External Customer [Line Items] | |||
Revenue by service type as a proportion of total revenues (percent) | 98.40% | 98.50% | 98.70% |
Surgical Facility Services | |||
Revenue from External Customer [Line Items] | |||
Revenue by service type as a proportion of total revenues (percent) | 96% | 95.80% | 95.70% |
Ancillary services revenues | |||
Revenue from External Customer [Line Items] | |||
Revenue by service type as a proportion of total revenues (percent) | 2.40% | 2.70% | 3% |
Other service revenues | |||
Revenue from External Customer [Line Items] | |||
Revenue by service type as a proportion of total revenues (percent) | 1.60% | 1.50% | 1.30% |
Organization and Summary of A_6
Organization and Summary of Accounting Policies - Revenues by Sources (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Disaggregation of Revenue [Line Items] | |||
Total revenues | $ 2,743.3 | $ 2,539.3 | $ 2,225.1 |
Patent service revenues | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | $ 2,700.4 | $ 2,502.1 | $ 2,195 |
Patent service revenues | Customer | Revenue | |||
Disaggregation of Revenue [Line Items] | |||
Revenue by service type as a proportion of total revenues (percent) | 100% | 100% | 100% |
Private insurance | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | $ 1,418.6 | $ 1,288 | $ 1,110.1 |
Private insurance | Customer | Revenue | |||
Disaggregation of Revenue [Line Items] | |||
Revenue by service type as a proportion of total revenues (percent) | 52.50% | 51.50% | 50.60% |
Government | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | $ 1,128.1 | $ 1,059.2 | $ 949.9 |
Government | Customer | Revenue | |||
Disaggregation of Revenue [Line Items] | |||
Revenue by service type as a proportion of total revenues (percent) | 41.80% | 42.30% | 43.30% |
Self-pay | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | $ 68.1 | $ 65.9 | $ 61.1 |
Self-pay | Customer | Revenue | |||
Disaggregation of Revenue [Line Items] | |||
Revenue by service type as a proportion of total revenues (percent) | 2.50% | 2.60% | 2.80% |
Other | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | $ 85.6 | $ 89 | $ 73.9 |
Other | Customer | Revenue | |||
Disaggregation of Revenue [Line Items] | |||
Revenue by service type as a proportion of total revenues (percent) | 3.20% | 3.60% | 3.30% |
Other service revenues | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | $ 42.9 | $ 37.2 | $ 30.1 |
Other service revenues | Related Party | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | $ 18.4 | $ 15.7 | $ 9.3 |
Organization and Summary of A_7
Organization and Summary of Accounting Policies - Non-Controlling Interests - Redeemable (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Non-Controlling Interests - Redeemable [Roll Forward] | ||
Balance at beginning of period | $ 342 | $ 330.2 |
Net income attributable to non-controlling interests—redeemable | 37.8 | 44.5 |
Acquisition and disposal of shares of non-controlling interests, net—redeemable | (9.3) | 10.4 |
Distributions to non-controlling interest —redeemable holders | (43.1) | (43.1) |
Balance at end of period | $ 327.4 | $ 342 |
Organization and Summary of A_8
Organization and Summary of Accounting Policies - Medicare Accelerated Payments and Deferred Governmental Grants (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Grant funds | $ 1.1 | $ 2.4 | $ 37.9 |
Unrecognized grant funds received | 3 | ||
Repayments of grants received | $ 60 | $ 60 |
Organization and Summary of A_9
Organization and Summary of Accounting Policies - Schedule of Carrying Amount and Fair Value of Long-Term Debt (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 | Apr. 11, 2019 | Jun. 30, 2017 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Long-term debt | $ 2,803.8 | |||
Secured Debt | Senior secured term loan | Carrying Amount | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Long-term debt | 1,398.4 | $ 1,370 | ||
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 | $ 1,401.9 | 1,359.7 | ||
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 | $ 185 | 185 | ||
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 | $ 183.2 | 183.4 | ||
Senior Notes | 10.000% senior unsecured notes due 2027 | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Stated interest rate (percent) | 10% | 10% | ||
Senior Notes | 10.000% senior unsecured notes due 2027 | Carrying Amount | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Long-term debt | $ 320 | 320 | ||
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 | $ 321.2 | $ 326.8 |
Organization and Summary of _10
Organization and Summary of Accounting Policies - Variable Interest Entities (Details) $ in Millions | Dec. 31, 2023 USD ($) | Dec. 31, 2023 facility | Dec. 31, 2023 physician_practice | Dec. 31, 2022 USD ($) |
Variable Interest Entity [Line Items] | ||||
Number of facilities included in VIE | 7 | 5 | ||
Assets | $ 6,876.7 | $ 6,682.1 | ||
Variable Interest Entity, Primary Beneficiary | ||||
Variable Interest Entity [Line Items] | ||||
Assets | 65.3 | 64.9 | ||
Liabilities | $ 41.2 | $ 40.9 |
Acquisitions, Disposals and D_2
Acquisitions, Disposals and Deconsolidations - Acquisitions (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 USD ($) facility physician_practice | Dec. 31, 2022 USD ($) facility | Dec. 31, 2021 USD ($) facility physician_practice | |
Business Acquisition [Line Items] | |||
Total cash consideration, net of cash acquired | $ 80 | $ 146.4 | $ 285.8 |
Goodwill | $ 4,326 | $ 4,137.1 | $ 3,911.8 |
Equity Method Investments | |||
Business Acquisition [Line Items] | |||
Number of non-controlling interests in surgical facilities acquired | facility | 5 | 7 | |
Number of non-controlling interests in in-development de novo surgical facilities acquired | facility | 2 | 7 | |
Surgical Facilities | |||
Business Acquisition [Line Items] | |||
Number of business entities acquired | facility | 5 | 7 | 8 |
Total cash consideration, net of cash acquired | $ 146.4 | ||
Noncash consideration | 5.6 | ||
Recognized non-controlling interests | 89.1 | ||
Goodwill | 271.7 | ||
Liabilities assumed in acquisition | $ 39.4 | ||
Physician Practices | |||
Business Acquisition [Line Items] | |||
Number of business entities acquired | physician_practice | 4 | 2 | |
Six Surgical Facilities | |||
Business Acquisition [Line Items] | |||
Number of business entities acquired | facility | 6 | ||
Total cash consideration, net of cash acquired | $ 24.3 | ||
Recognized non-controlling interests | 84.5 | ||
Goodwill | 142.5 | ||
Non-controlling interest, fair value | 38.7 | ||
Net loss on fair value of non-controlling interest | 9.3 | ||
Surgical Facilities, Existing Markets | |||
Business Acquisition [Line Items] | |||
Number of business entities acquired | facility | 2 | 2 | |
Surgical Facilities and Physician Practices | |||
Business Acquisition [Line Items] | |||
Total cash consideration, net of cash acquired | 55.5 | $ 285.8 | |
Noncash consideration | 1.3 | ||
Recognized non-controlling interests | 38.7 | 185.9 | |
Goodwill | 84.7 | $ 446.1 | |
Surgical Facilities and In-Development De Novo Surgical Facilities | |||
Business Acquisition [Line Items] | |||
Total cash consideration, net of cash acquired | 50.3 | $ 95.1 | |
Surgical Facilities and In-Development De Novo Surgical Facilities | Management Rights Agreement | |||
Business Acquisition [Line Items] | |||
Intangible assets acquired | $ 21 |
Acquisitions, Disposals and D_3
Acquisitions, Disposals and Deconsolidations - Disposals and Deconsolidations (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 USD ($) facility | Dec. 31, 2022 USD ($) facility business_entity | Dec. 31, 2021 USD ($) facility | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Proceeds from disposals of facilities and other assets | $ 25.8 | $ 12.9 | $ 6 |
Disposal Group, Not Discontinued Operation, Gain (Loss) on Disposal, Statement of Income or Comprehensive Income [Extensible Enumeration] | Gain (Loss) On Disposition Of Assets And Deconsolidation | ||
Four Surgical Facilities | Disposed of by Sale | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Number of interests sold | facility | 6 | ||
Proceeds from disposals of facilities and other assets | $ 30.4 | ||
Pre-tax gain (loss) on disposal | 26.9 | ||
Surgical Facilities and In-Development De Novo Surgical Facilities | Disposed of by Sale | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Proceeds from disposals of facilities and other assets | 1.5 | ||
Pre-tax gain (loss) on disposal | $ (13.7) | ||
2022 Disposals | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Pre-tax gain (loss) on disposal | $ (5.6) | ||
2022 Disposals | Disposed of by Sale | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Number of interests sold | facility | 2 | ||
Proceeds from disposals of facilities and other assets | $ 25.7 | ||
Pre-tax gain (loss) on disposal | $ (4.5) | ||
Number of surgical facilities contributed as non-cash consideration | facility | 2 | ||
Fair value of investments | $ 9.8 | ||
2022 Disposals | Disposed of by Sale | Series of Individually Immaterial Business Acquisitions | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Number of business entities acquired | business_entity | 2 | ||
Disposal Group One | Disposed of by Sale | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Number of interests sold | facility | 3 | ||
Proceeds from disposals of facilities and other assets | $ 6 | ||
Pre-tax gain (loss) on disposal | $ 4 |
Property and Equipment - Narrat
Property and Equipment - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment [Line Items] | |||
Depreciation expense | $ 112.8 | $ 112.1 | $ 94.5 |
Buildings and improvements | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Property, and equipment useful life | 20 years | ||
Buildings and improvements | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Property, and equipment useful life | 40 years | ||
Computer and software | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Property, and equipment useful life | 3 years | ||
Computer and software | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Property, and equipment useful life | 5 years | ||
Furniture and equipment | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Property, and equipment useful life | 5 years | ||
Furniture and equipment | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Property, and equipment useful life | 7 years |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Right-of-use finance lease assets | $ 716.3 | $ 631.3 |
Property and equipment, at cost | 1,423.1 | 1,250.9 |
Less: Accumulated depreciation | (454.4) | (374.3) |
Property and equipment, net | 968.7 | 876.6 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, excluding right-of-use finance lease asset, at cost | 9.2 | 11.1 |
Buildings and improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, excluding right-of-use finance lease asset, at cost | 225.3 | 164 |
Furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, excluding right-of-use finance lease asset, at cost | 29.5 | 26.7 |
Computer and software | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, excluding right-of-use finance lease asset, at cost | 108.5 | 96.6 |
Medical equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, excluding right-of-use finance lease asset, at cost | 310.1 | 263.1 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, excluding right-of-use finance lease asset, at cost | $ 24.2 | $ 58.1 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Narrative (Details) | 12 Months Ended | ||
Dec. 31, 2023 USD ($) reporting_unit | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Finite-Lived Intangible Assets [Line Items] | |||
Number of reporting units | reporting_unit | 2 | ||
Goodwill impairment loss | $ 0 | $ 0 | $ 0 |
Amortization expense | $ 7,600,000 | $ 6,400,000 | $ 6,900,000 |
Physician income guarantees | Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful lives of intangible assets | 2 years | ||
Physician income guarantees | Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful lives of intangible assets | 4 years | ||
Non-compete agreements | Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful lives of intangible assets | 2 years | ||
Non-compete agreements | Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful lives of intangible assets | 5 years | ||
Management rights agreements | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful lives of intangible assets | 15 years |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Changes in Carrying Amount of Goodwill (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Goodwill [Roll Forward] | ||
Goodwill, beginning of period | $ 4,137.1 | $ 3,911.8 |
Acquisitions, including post acquisition adjustments | 225.9 | 269.7 |
Disposals and deconsolidations | (37) | (44.4) |
Goodwill, end of period | $ 4,326 | $ 4,137.1 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Components of Intangible Assets (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross carrying amount | $ 72.8 | $ 52.4 |
Finite-lived intangible assets, accumulated amortization | (32.6) | (25.1) |
Total | 40.2 | 27.3 |
Indefinite-lived intangible assets | 14.6 | 15 |
Total intangible assets, gross carrying amount | 87.4 | 67.4 |
Total intangible assets, net | 54.8 | 42.3 |
Management rights agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross carrying amount | 42.8 | 23.9 |
Finite-lived intangible assets, accumulated amortization | (12) | (10.2) |
Total | 30.8 | 13.7 |
Other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross carrying amount | 30 | 28.5 |
Finite-lived intangible assets, accumulated amortization | (20.6) | (14.9) |
Total | $ 9.4 | $ 13.6 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets - Future Amortization of Intangible Assets (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2024 | $ 5.8 | |
2025 | 5.3 | |
2026 | 5 | |
2027 | 3.8 | |
2028 | 3.3 | |
Thereafter | 17 | |
Total | $ 40.2 | $ 27.3 |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 | Apr. 11, 2019 | Jun. 30, 2017 |
Debt Instrument [Line Items] | ||||
Finance lease obligations | $ 693.6 | $ 585.7 | ||
Less: unamortized debt issuance costs and discounts | (27.1) | (10.2) | ||
Total debt | 2,775.1 | 2,621.8 | ||
Less: current maturities | 73.3 | 62.8 | ||
Total long-term debt | 2,701.8 | 2,559 | ||
Secured Debt | Senior secured term loan | ||||
Debt Instrument [Line Items] | ||||
Long-term debt | 1,398.4 | 1,370 | ||
Unamortized fair value discount | (1.6) | 2.1 | ||
Secured Debt | Senior secured revolving credit facility | ||||
Debt Instrument [Line Items] | ||||
Long-term debt | 0 | 0 | ||
Senior Notes | 6.750% senior unsecured notes due 2025 | ||||
Debt Instrument [Line Items] | ||||
Long-term debt | $ 185 | 185 | ||
Stated interest rate (percent) | 6.75% | 6.75% | ||
Senior Notes | 10.000% senior unsecured notes due 2027 | ||||
Debt Instrument [Line Items] | ||||
Long-term debt | $ 320 | 320 | ||
Stated interest rate (percent) | 10% | 10% | ||
Notes payable and other secured loans | ||||
Debt Instrument [Line Items] | ||||
Long-term debt | $ 205.2 | $ 171.3 |
Long-Term Debt - New Credit Fac
Long-Term Debt - New Credit Facilities (Details) - USD ($) | 12 Months Ended | |||
Dec. 19, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Debt Instrument [Line Items] | ||||
Debt issuance costs and discount | $ 27,100,000 | $ 10,200,000 | ||
Loss on debt extinguishment | 15,500,000 | 14,900,000 | $ 9,100,000 | |
Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Loss on debt extinguishment | 1,000,000 | $ 9,100,000 | ||
Voluntary prepayment of debt | $ 150,000,000 | |||
New Credit Facilities | Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Debt issuance costs and discount | (34,500,000) | |||
Loss on debt extinguishment | $ 15,500,000 | |||
Term Loan | Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Original balance of debt | $ 1,400,000,000 | |||
Loan amortization rate | 0.25% | |||
Term Loan | Secured Debt | Term Rate Based Secured Overnight Financing Rate (SOFR) | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, basis spread on variable rate (percent) | 3.50% | |||
Term Loan | Secured Debt | Federal Funds Effective Swap Rate | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, basis spread on variable rate (percent) | 0.50% | |||
Term Loan | Secured Debt | SOFR | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, basis spread on variable rate (percent) | 1% | |||
Debt instrument, basis spread on variable rate, floor (percent) | 1% | |||
Term Loan | Secured Debt | Base Rate | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, basis spread on variable rate (percent) | 2.50% | |||
Credit Facility | Secured Debt | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 703.8 | |||
Outstanding balance on debt | $ 694,300,000 | |||
First lien net leverage ratio | 5 | |||
Commitment threshold (percent) | 40% | |||
Credit Facility | Secured Debt | Revolving Credit Facility | Maximum | ||||
Debt Instrument [Line Items] | ||||
Commitment fee (percent) | 0.50% | |||
Credit Facility | Secured Debt | Revolving Credit Facility | Minimum | ||||
Debt Instrument [Line Items] | ||||
Commitment fee (percent) | 0.25% | |||
Credit Facility | Secured Debt | Revolving Credit Facility | SOFR | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, basis spread on variable rate (percent) | 3.25% | |||
Credit Facility | Secured Debt | Revolving Credit Facility | Base Rate | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, basis spread on variable rate (percent) | 2.25% | |||
Credit Facility | Secured Debt | Letter of Credit | ||||
Debt Instrument [Line Items] | ||||
Outstanding letters of credit | $ 9,500,000 | |||
Senior secured term loan | Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Original balance of debt | 1,545,000,000 | |||
Senior Secured Revolving Credit Facility | Secured Debt | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 350,000,000 |
Long-Term Debt - 6.750% Senior
Long-Term Debt - 6.750% Senior Unsecured Notes due 2025 (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Jun. 30, 2017 | Dec. 31, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Debt Instrument [Line Items] | |||||
Unpaid interest | $ 169,600,000 | $ 218,700,000 | $ 194,300,000 | ||
Senior Notes | 6.750% Senior Unsecured Notes due 2025 | |||||
Debt Instrument [Line Items] | |||||
Stated interest rate (percent) | 6.75% | 6.75% | |||
Original balance of debt | $ 370,000,000 | ||||
Redemption price, percentage (percent) | 100% | 100% | |||
Repayments of unsecured notes | $ 185,000,000 | ||||
Unpaid interest | $ 6,200,000 | ||||
Senior Notes | 6.750% Senior Unsecured Notes due 2025 | Redemption Period Three | |||||
Debt Instrument [Line Items] | |||||
Redemption price, percentage (percent) | 101% |
Long-Term Debt - 10.000% Senior
Long-Term Debt - 10.000% Senior Unsecured Notes due 2027 (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||||
Apr. 11, 2019 | Dec. 31, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Jul. 30, 2020 | |
Debt Instrument [Line Items] | ||||||
Unpaid interest | $ 169,600,000 | $ 218,700,000 | $ 194,300,000 | |||
Loss on debt extinguishment | $ 15,500,000 | 14,900,000 | $ 9,100,000 | |||
Senior Notes | 10.000% Senior Unsecured Notes due 2027 | ||||||
Debt Instrument [Line Items] | ||||||
Stated interest rate (percent) | 10% | 10% | ||||
Face value of debt issued | $ 430,000,000 | $ 115,000,000 | ||||
Redemption price of debt (percent) | 105% | |||||
Repayments of unsecured notes | $ 225,000,000 | |||||
Unpaid interest | $ 4,700,000 | |||||
Loss on debt extinguishment | $ 13,900,000 | |||||
Senior Notes | 10.000% Senior Unsecured Notes due 2027 | Redemption Period One | ||||||
Debt Instrument [Line Items] | ||||||
Redemption price of debt (percent) | 102.50% | |||||
Senior Notes | 10.000% Senior Unsecured Notes due 2027 | Redemption Period Two | ||||||
Debt Instrument [Line Items] | ||||||
Redemption price of debt (percent) | 100% | |||||
Senior Notes | 10.000% Senior Unsecured Notes due 2027 | Redemption Period Six | ||||||
Debt Instrument [Line Items] | ||||||
Redemption price of debt (percent) | 101% |
Long-Term Debt - Maturities of
Long-Term Debt - Maturities of Debt Obligations (Details) $ in Millions | Dec. 31, 2023 USD ($) |
Debt Disclosure [Abstract] | |
2024 | $ 73.3 |
2025 | 264.8 |
2026 | 62.6 |
2027 | 376.4 |
2028 | 51.1 |
Thereafter | 1,975.6 |
Total | $ 2,803.8 |
Leases - Narrative (Details)
Leases - Narrative (Details) $ in Millions | 12 Months Ended | |
Dec. 31, 2023 USD ($) lease_renewal_option | Dec. 31, 2022 USD ($) | |
Lessee, Lease, Description [Line Items] | ||
Initial term of operating leases | 10 years | |
Number of options to renew operating leases | lease_renewal_option | 1 | |
Increase in finance lease liabilities | $ 97.1 | |
Increase in finance lease assets | 95.7 | |
Decrease in operating lease liabilities | 38.4 | |
Decrease in operating lease assets | 36.9 | |
Operating lease costs | 65.7 | $ 65.5 |
Non-Controlling Interests— Non-Redeemable | ||
Lessee, Lease, Description [Line Items] | ||
Rent paid under finance lease agreement, allocated to principal and interest | 26.4 | 26.3 |
Investor | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease costs | $ 19.5 | $ 19.6 |
Leases - Schedule of Components
Leases - Schedule of Components of Right-of-use Assets and Liabilities Related to Leases (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 |
Assets: | ||
Operating lease assets | $ 255.3 | $ 279.1 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Property and equipment, net | Property and equipment, net |
Finance lease assets | $ 587 | $ 529.6 |
Total leased assets | $ 842.3 | $ 808.7 |
Operating lease liabilities: | ||
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Other current liabilities | Other current liabilities |
Current | $ 37.6 | $ 36.5 |
Long-term | 248.9 | 271.4 |
Total operating lease liabilities | $ 286.5 | $ 307.9 |
Finance lease liabilities: | ||
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List] | Current maturities of long-term debt | Current maturities of long-term debt |
Current | $ 25.4 | $ 20.9 |
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Long-term debt, less current maturities | Long-term debt, less current maturities |
Long-term | $ 668.2 | $ 564.8 |
Total finance lease liabilities | 693.6 | 585.7 |
Total lease liabilities | $ 980.1 | $ 893.6 |
Weighted-average remaining lease term, operating leases | 9 years 2 months 12 days | 9 years 2 months 12 days |
Weighted-average remaining lease term, finance leases | 20 years 6 months | 20 years 8 months 12 days |
Weighted-average discount rate, operating leases (percent) | 8.20% | 9.10% |
Weighted-average discount rate, finance leases (percent) | 8.20% | 8.80% |
Leases - Lease Expense and Cash
Leases - Lease Expense and Cash Flow Information (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Leases [Abstract] | ||
Operating lease costs | $ 65.7 | $ 65.5 |
Finance lease costs: | ||
Amortization of leased assets | 39.9 | 38.8 |
Interest on lease liabilities | 48.6 | 42.7 |
Total finance lease costs | 88.5 | 81.5 |
Variable and short-term lease costs | 20.1 | 18.5 |
Total lease costs | 174.3 | 165.5 |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash outflows from operating leases | 63.7 | 63.2 |
Operating cash outflows from finance leases | 45.8 | 41.7 |
Financing cash outflows from finance leases | 26.7 | 24.6 |
Right-of-use assets obtained in exchange for lease obligations: | ||
Operating leases | 60.1 | 57.3 |
Finance leases | $ 167.5 | $ 180.2 |
Leases - Maturities of Lease Li
Leases - Maturities of Lease Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 |
Operating Leases | ||
2023 | $ 59.1 | |
2024 | 54.6 | |
2025 | 50.6 | |
2026 | 42.6 | |
2027 | 33.1 | |
Thereafter | 169.7 | |
Total lease payments | 409.7 | |
Less: imputed interest | (123.2) | |
Total lease obligations | 286.5 | $ 307.9 |
Finance Leases | ||
2023 | 77.2 | |
2024 | 75.6 | |
2025 | 72.8 | |
2026 | 69.1 | |
2027 | 65.2 | |
Thereafter | 1,220.6 | |
Total lease payments | 1,580.5 | |
Less: imputed interest | (886.9) | |
Total lease obligations | $ 693.6 | $ 585.7 |
Derivatives and Hedging Activ_3
Derivatives and Hedging Activities - Schedule of Interest Rate Swaps and Interest Rate Caps Outstanding (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Derivative asset, notional amount | $ 57.4 | $ 113.4 |
Derivative liability, notional amount | (17.8) | (40.4) |
Derivative notional amount | 1,360.1 | 1,518.2 |
Pay-fixed swap | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Derivative asset, notional amount | 435 | 435 |
Pay-fixed swap | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Derivative asset, notional amount | 330 | 330 |
Pay-fixed swap | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Derivative asset, notional amount | 435 | 435 |
Interest rate cap | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Derivative asset, notional amount | 151.4 | 159.1 |
Interest rate cap | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Derivative asset, notional amount | 8.7 | 159.1 |
Pay-fixed swap | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Derivative asset, notional amount | 0 | 165 |
Pay-fixed swap | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Derivative asset, notional amount | 0 | 120 |
Pay-fixed swap | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Derivative asset, notional amount | 0 | 150 |
Receive-fixed swap | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Derivative liability, notional amount | 0 | (165) |
Receive-fixed swap | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Derivative liability, notional amount | 0 | (120) |
Receive-fixed swap | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Derivative liability, notional amount | $ 0 | $ (150) |
Derivatives and Hedging Activ_4
Derivatives and Hedging Activities - Narrative (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 USD ($) interest_rate_swap | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Derivative [Line Items] | |||
Current notional amount | $ 1,360.1 | $ 1,518.2 | |
Amount estimated to be reclassified as a reduction to interest expense over next 12 months | (53.8) | ||
Derivatives in cash flow hedging relationships | |||
Derivative [Line Items] | |||
Gain (loss) reclassified from accumulated OCI into income | 34.7 | $ (10.3) | $ (24.7) |
Derivatives not designated as hedging instruments | |||
Derivative [Line Items] | |||
Gain (loss) reclassified from accumulated OCI into income | $ 7.5 | ||
Interest rate swaps | |||
Derivative [Line Items] | |||
Number of interest rate swaps held | interest_rate_swap | 3 | ||
Interest rate swaps | Derivatives in cash flow hedging relationships | |||
Derivative [Line Items] | |||
Current notional amount | $ 1,200 | ||
Three Pay-fixed Interest Rate Swaps | Minimum | SOFR | |||
Derivative [Line Items] | |||
Variable interest rate of derivative instrument (percent) | 0.75% | ||
Six Undersigned Interest Rate Swaps | Derivatives in cash flow hedging relationships | |||
Derivative [Line Items] | |||
Number of interest rate swaps held | interest_rate_swap | 6 | ||
Three Pay-fixed, Receive 1-Month LIBOR, Subject To Minimum Of 1.00% | Derivatives in cash flow hedging relationships | |||
Derivative [Line Items] | |||
Number of interest rate swaps held | interest_rate_swap | 3 | ||
Three Pay-fixed, Receive 1-Month LIBOR, Subject To Minimum Of 1.00% | Derivatives in cash flow hedging relationships | Minimum | SOFR | |||
Derivative [Line Items] | |||
Variable interest rate of derivative instrument (percent) | 1% | ||
Three Interest Rate Swaps That Pay 1-Month LIBOR Subject To Minimum Of 1.00% | Derivatives in cash flow hedging relationships | |||
Derivative [Line Items] | |||
Number of interest rate swaps held | interest_rate_swap | 3 | ||
Three Interest Rate Swaps That Pay 1-Month LIBOR Subject To Minimum Of 1.00% | Derivatives in cash flow hedging relationships | Minimum | SOFR | |||
Derivative [Line Items] | |||
Variable interest rate of derivative instrument (percent) | 1% | ||
Interest rate caps | |||
Derivative [Line Items] | |||
Number of interest rate swaps held | interest_rate_swap | 2 | ||
Current notional amount | $ 160.1 | ||
Interest rate caps | Derivatives not designated as hedging instruments | |||
Derivative [Line Items] | |||
Gain on termination | $ 8.6 |
Derivatives and Hedging Activ_5
Derivatives and Hedging Activities - Schedule of Derivative Instruments in Statement of Financial Position, Fair Value (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 |
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||
Derivative asset, notional amount | $ 57.4 | $ 113.4 |
Derivative liability, notional amount | 17.8 | 40.4 |
Derivatives not designated as hedging instruments | Other long-term assets | Interest rate caps | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||
Derivative asset, notional amount | 0 | 9 |
Derivatives not designated as hedging instruments | Other long-term assets | Interest rate swaps | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||
Derivative asset, notional amount | 0 | 8.5 |
Derivatives not designated as hedging instruments | Other long-term liabilities | Interest rate swaps | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||
Derivative liability, notional amount | 0 | 8.5 |
Derivatives in cash flow hedging relationships | Other long-term assets | Interest rate caps | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||
Derivative asset, notional amount | 6 | 10.4 |
Derivatives in cash flow hedging relationships | Other long-term assets | Interest rate swaps | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||
Derivative asset, notional amount | 51.4 | 85.5 |
Derivatives in cash flow hedging relationships | Other long-term liabilities | Interest rate swaps | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||
Derivative liability, notional amount | $ 17.8 | $ 31.9 |
Derivatives and Hedging Activ_6
Derivatives and Hedging Activities - Pre-tax Effect of Derivatives on AOCI and Statement of Operations (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | |||
OCI, Cash Flow Hedge, Reclassification for Discontinuance, Statement of Income or Comprehensive Income [Extensible Enumeration] | Interest expense, net | ||
Amortization of accumulated OCI related | $ 19.6 | $ 21.4 | $ 14 |
Derivatives not designated as hedging instruments | |||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | |||
(Gain) loss recognized in income | 0.6 | (0.4) | (0.1) |
Gain reclassified from accumulated OCI into income | 0 | 7.5 | 0 |
(Gain) loss reclassified from accumulated OCI into income (effective portion) | (7.5) | ||
Derivatives in cash flow hedging relationships | |||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | |||
Gain (loss) recognized in OCI (effective portion) | 16 | 104.9 | 4.8 |
(Gain) loss reclassified from accumulated OCI into income (effective portion) | $ (34.7) | $ 10.3 | $ 24.7 |
Earnings Per Share - Reconcilia
Earnings Per Share - Reconciliation of Numerator and Denominator of Basic and Diluted Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 12 Months Ended | |||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | ||
Numerator: | ||||
Net loss attributable to Surgery Partners, Inc. | $ (11.9) | $ (54.6) | $ (70.9) | |
Less: amounts allocated to participating securities | 0 | 0 | (10.3) | |
Net loss attributable to common stockholders | (11.9) | (54.6) | (81.2) | |
Net loss attributable to common stockholders (diluted) | $ (11.9) | $ (54.6) | $ (81.2) | |
Weighted average common shares outstanding: | ||||
Basic (shares) | 125,613 | 91,952 | 72,427 | |
Diluted (shares) | [1] | 125,613 | 91,952 | 72,427 |
Net loss per share attributable to common stockholders: | ||||
Basic (in USD per share) | $ (0.09) | $ (0.59) | $ (1.12) | |
Diluted (in USD per share) | [1] | $ (0.09) | $ (0.59) | $ (1.12) |
Stock options | ||||
Net loss per share attributable to common stockholders: | ||||
Dilutive securities outstanding not included in the computation of diluted loss per share as their effect is antidilutive (shares) | 1,246 | 1,459 | 1,920 | |
Restricted shares | ||||
Net loss per share attributable to common stockholders: | ||||
Dilutive securities outstanding not included in the computation of diluted loss per share as their effect is antidilutive (shares) | 263 | 679 | 1,452 | |
[1] The impact of potentially dilutive securities for all periods were not considered because the effect would be anti-dilutive. |
Earnings Per Share - Narrative
Earnings Per Share - Narrative (Details) - USD ($) | 12 Months Ended | ||||||||||
Dec. 22, 2022 | Nov. 23, 2022 | Nov. 21, 2022 | Nov. 12, 2021 | Nov. 08, 2021 | Feb. 01, 2021 | Jan. 27, 2021 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 15, 2017 | |
Sale Of Stock [Line Items] | |||||||||||
Common stock, par value (in USD per share) | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | ||||||
Sale price to public (in USD per share) | $ 24.50 | $ 46.50 | $ 30.25 | ||||||||
Underwriting discounts, commissions and other related costs related to offering | $ 0 | $ 25,200,000 | $ 27,600,000 | ||||||||
Stock repurchase program, authorized amount | $ 50,000,000 | ||||||||||
Stock repurchase program, remaining authorized repurchase amount | $ 46,000,000 | ||||||||||
Options Shares | |||||||||||
Sale Of Stock [Line Items] | |||||||||||
Stock sold in offering (shares) | 3,385,408 | ||||||||||
Public Offering | |||||||||||
Sale Of Stock [Line Items] | |||||||||||
Stock sold in offering (shares) | 26,854,796 | 6,900,000 | 8,625,000 | ||||||||
Net proceeds from stock offering | $ 657,900,000 | $ 320,900,000 | $ 260,900,000 | ||||||||
Underwriting discounts, commissions and other related costs related to offering | $ 23,000,000 | $ 14,900,000 | $ 12,700,000 | ||||||||
Firm Shares | |||||||||||
Sale Of Stock [Line Items] | |||||||||||
Stock sold in offering (shares) | 23,469,388 | 6,000,000 | 7,500,000 | ||||||||
Additional Shares Granted to Underwriters | |||||||||||
Sale Of Stock [Line Items] | |||||||||||
Stock sold in offering (shares) | 3,520,408 | 900,000 | 1,125,000 | ||||||||
Private Placement | |||||||||||
Sale Of Stock [Line Items] | |||||||||||
Stock sold in offering (shares) | 9,183,673 | ||||||||||
Net proceeds from stock offering | $ 225,000,000 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Contingency [Line Items] | |||
Cash paid for income taxes | $ 1,400,000 | $ 1,800,000 | $ 1,500,000 |
Valuation allowance | 150,100,000 | 114,700,000 | |
Change in valuation allowance | 35,400,000 | ||
Accrued interest and penalties related to uncertain tax positions | 0 | 100,000 | |
Uncertain tax positions that would impact effective tax rate | 0 | $ 100,000 | |
Other Comprehensive Income | |||
Income Tax Contingency [Line Items] | |||
Change in valuation allowance | 8,300,000 | ||
Income Tax Expense | |||
Income Tax Contingency [Line Items] | |||
Change in valuation allowance | 27,100,000 | ||
Interest Limitation | |||
Income Tax Contingency [Line Items] | |||
Capital loss carryforwards | 652,800,000 | ||
Domestic Tax Authority | |||
Income Tax Contingency [Line Items] | |||
Net operating loss carryforwards | 533,600,000 | ||
Subject to expiration | 438,900,000 | ||
State and Local Jurisdiction | |||
Income Tax Contingency [Line Items] | |||
Net operating loss carryforwards | $ 588,700,000 |
Income Taxes - Income Tax Expen
Income Taxes - Income Tax Expense (Benefit) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Current: | |||
Federal | $ 0 | $ 0 | $ 0 |
State | 1.4 | 1.5 | 1.5 |
Deferred: | |||
Federal | (1.5) | 17.5 | 7.9 |
State | (0.2) | 4.3 | 1.1 |
Total income tax (benefit) expense | $ (0.3) | $ 23.3 | $ 10.5 |
Income Taxes - Income Tax Rate
Income Taxes - Income Tax Rate Reconciliation (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |||
Tax expense at U.S.federal statutory rate | $ 28.4 | $ 23.2 | $ 17.1 |
State income tax, net of U.S. federal tax benefit | 0.9 | 6 | 2.3 |
Change in federal valuation allowance | 21.5 | 29.1 | 20.9 |
Net income attributable to non-controlling interests | (30.9) | (30.2) | (29.9) |
Stock option compensation | 0.1 | (2.5) | (1.7) |
Differences related to divested facilities | (18.9) | (1.4) | (2.6) |
Tax return reconciling differences | (1) | (1) | 1.3 |
Change in effective tax rate | 0 | (0.5) | 0 |
Tax Receivable Agreement liability | 0 | 0.4 | 0.7 |
Adjustments to unrealized attributes | 0 | 0 | 2.3 |
Other | (0.4) | 0.2 | 0.1 |
Total income tax (benefit) expense | $ (0.3) | $ 23.3 | $ 10.5 |
Income Taxes - Temporary Differ
Income Taxes - Temporary Differences and Approximate Tax Effects of Deferred Tax Asset and Liability (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 |
Deferred tax assets: | ||
Medical malpractice liability | $ 3.6 | $ 4.1 |
Accrued vacation and incentive compensation | 3 | 3.1 |
Net operating loss carryforwards | 143.6 | 146 |
Allowance for bad debts | 1.2 | 2.9 |
Capital loss carryforwards | 1.8 | 0 |
Deferred financing costs | 3.3 | 5.1 |
Section 163(j) interest | 162.3 | 137.7 |
Interest rate derivative liability | 4.7 | 10.5 |
TRA liability | 0 | 0.1 |
Right of use | 47.2 | 52.5 |
Software development costs | 1.7 | 1 |
Other deferred assets | 9.6 | 9.2 |
Total gross deferred tax assets | 382 | 372.2 |
Less: Valuation allowance | (150.1) | (114.7) |
Total deferred tax assets | 231.9 | 257.5 |
Deferred tax liabilities: | ||
Depreciation on property and equipment | (3) | (2) |
Basis differences of partnerships and joint ventures | (84.2) | (87.4) |
Right of use | (35.6) | (44.4) |
Amortization of intangible assets | (3) | (1.3) |
Interest rate derivative asset | (15.1) | (29.5) |
Other deferred liabilities | (1.5) | (1.4) |
Total deferred tax liabilities | (142.4) | (166) |
Net deferred tax assets | $ 89.5 | $ 91.5 |
Income Taxes - Gross Unrecogniz
Income Taxes - Gross Unrecognized Tax Benefits (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Unrecognized tax benefits at beginning of year | $ 0.1 | $ 0.1 |
Reductions for tax positions of prior years | (0.1) | 0 |
Unrecognized tax benefits at end of year | $ 0 | $ 0.1 |
Equity-Based Compensation - Nar
Equity-Based Compensation - Narrative (Details) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 USD ($) trading_day installment $ / shares shares | Dec. 31, 2022 USD ($) shares | Dec. 31, 2021 USD ($) shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options and rights granted (shares) | 0 | 0 | 0 |
Unrecognized compensation cost | $ | $ 25.7 | ||
Equity-based compensation expense | $ | $ 17.7 | $ 18.4 | $ 17.4 |
Restricted Stock Awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Awards granted during period (shares) | 505,787 | 257,291 | |
PSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Awards granted during period (shares) | 334,275 | 203,549 | |
Vesting period | 2 years | ||
Restricted units granted, earned during period (shares) | 74,123 | 146,937 | |
Stock Option | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options and rights granted (shares) | 0 | 0 | 0 |
SAR Awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Awards outstanding (in shares) | 200,000 | ||
Exercise price (in USD per share) | $ / shares | $ 12.90 | ||
Term of award | 4 years | ||
SAR Awards | Tranche One | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 5 years | ||
Vesting rate (as a percent) | 50% | ||
Number of annual installments | installment | 5 | ||
SAR Awards | Tranche Two | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting rate (as a percent) | 25% | ||
Share price (in USD per share) | $ / shares | $ 25 | ||
Threshold of consecutive trading days | trading_day | 60 | ||
SAR Awards | Tranche Three | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting rate (as a percent) | 25% | ||
Share price (in USD per share) | $ / shares | $ 35 | ||
Threshold of consecutive trading days | trading_day | 60 | ||
Minimum | Restricted Stock Awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 3 years | ||
Minimum | PSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Proportion of shares payable at end of period (as a percent) | 0% | ||
Maximum | Restricted Stock Awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 5 years | ||
Maximum | PSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Proportion of shares payable at end of period (as a percent) | 300% | ||
2015 Omnibus Incentive Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares authorized under plan (shares) | 11,815,700 | ||
Shares available for future grant (shares) | 4,270,905 |
Equity-Based Compensation - Res
Equity-Based Compensation - Restricted and Performance Share-Based Activity (Details) - Restricted and Performance Shares - $ / shares | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Unvested Shares | |||
Outstanding, beginning of the period (shares) | 995,413 | 1,655,396 | 1,447,367 |
Granted/Earned (shares) | 579,910 | 404,287 | 1,009,085 |
Forfeited/Cancelled (shares) | (50,158) | (116,485) | (77,844) |
Vested (shares) | (794,315) | (947,785) | (723,212) |
Outstanding, end of the period (shares) | 730,850 | 995,413 | 1,655,396 |
Weighted Average Grant Date Fair Value | |||
Outstanding, beginning of the period (in USD per share) | $ 23.87 | $ 11.55 | $ 9.75 |
Granted/Earned (in USD per share) | 32.54 | 47.38 | 39.90 |
Forfeited/Cancelled (in USD per share) | 35.14 | 39.65 | 47.40 |
Vested (in USD per share) | 32.55 | 51.28 | 42.88 |
Outstanding, end of the period (in USD per share) | $ 38.10 | $ 23.87 | $ 11.55 |
Equity-Based Compensation - Sum
Equity-Based Compensation - Summary of Options Activity (Details) - $ / shares | 12 Months Ended | |||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Options | ||||
Outstanding, beginning of period (shares) | 1,948,360 | 2,384,860 | 2,760,515 | |
Granted (shares) | 0 | 0 | 0 | |
Exercised (in shares) | (103,141) | (301,998) | (9,155) | |
Forfeited/Cancelled (shares) | 0 | (134,502) | (366,500) | |
Outstanding, end of period (shares) | 1,845,219 | 1,948,360 | 2,384,860 | 2,760,515 |
Weighted Average Exercise Price | ||||
Outstanding, beginning of period (in USD per share) | $ 12.69 | $ 12.82 | $ 12.88 | |
Exercised (in USD per share) | 12.92 | 13.42 | 6.28 | |
Forfeited/Cancelled (in USD per share) | 13.42 | 13.42 | ||
Outstanding, end of period (in USD per share) | $ 12.68 | $ 12.69 | $ 12.82 | $ 12.88 |
Weighted Average Remaining Contractual Term (years) | ||||
Outstanding | 5 years | 5 years 10 months 24 days | 7 years | 8 years |
Exercised | 4 years | 6 years 2 months 12 days | 7 years 8 months 12 days | |
Forfeited/Cancelled | 6 years 2 months 12 days | 7 years 2 months 12 days |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Retirement Benefits [Abstract] | |||
Vesting period | 5 years | ||
Matching contribution expense | $ 12.6 | $ 11.1 | $ 9.7 |
Other Current Liabilities (Deta
Other Current Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 |
Other Liabilities Disclosure [Abstract] | ||
Right-of-use operating lease liabilities | $ 37.6 | $ 36.5 |
Amounts due to patients and payors | 23.9 | 31.9 |
Cost report liabilities | 23.9 | 23.5 |
Acquisition escrow | 10.2 | 28.8 |
Interest payable | 17.8 | 19.4 |
Accrued expenses and other | 90.7 | 70 |
Total | $ 204.1 | $ 210.1 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Apr. 01, 2021 | Mar. 31, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Guarantor Obligations [Line Items] | |||||
Professional, general and workers' compensation insurance reserve | $ 18,200,000 | $ 20,800,000 | |||
Estimated insurance recoveries | 10,200,000 | 12,700,000 | |||
Payment under settlement agreement | $ 30,700,000 | ||||
Loss on litigation settlements | $ 32,800,000 | (10,600,000) | $ 29,300,000 | $ 0 | |
Business Interruption and Related Expenses | |||||
Guarantor Obligations [Line Items] | |||||
Business interruption and other expenses loss | 8,000,000 | ||||
Insurance recoveries | $ 0 |
Segment Reporting - Schedule of
Segment Reporting - Schedule of Segment Revenue and Operating Income (Details) $ in Millions | 1 Months Ended | 12 Months Ended | ||
Mar. 31, 2022 USD ($) | Dec. 31, 2023 USD ($) segment | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Segment Reporting [Abstract] | ||||
Number of operating segments | segment | 2 | |||
Segment Reporting Information [Line Items] | ||||
Revenues | $ 2,743.3 | $ 2,539.3 | $ 2,225.1 | |
Adjusted EBITDA | 438.1 | 380.2 | 339.6 | |
Reconciliation of Adjusted EBITDA: | ||||
Income (loss) before income taxes | 135 | 110.3 | 81.2 | |
Net income attributable to non-controlling interests | (147.2) | (141.6) | (141.6) | |
Interest expense, net | 193 | 234.9 | 221 | |
Depreciation and amortization | 118.1 | 114.8 | 98.8 | |
Equity-based compensation expense | 17.7 | 18.4 | 17.4 | |
Transaction, integration and acquisition costs | 64.9 | 48.6 | 46.1 | |
Net loss on disposals, consolidations and deconsolidations | 14.4 | 11.1 | 2.2 | |
Litigation settlements and regulatory change impact | 17.5 | (24.7) | 5.6 | |
Loss on debt extinguishment | 15.5 | 14.9 | 9.1 | |
Undesignated derivative activity | 0.6 | (8) | 0 | |
Other | 8.6 | 1.5 | (0.2) | |
Transaction and integration costs | 61.7 | 47.5 | 39.8 | |
Start-up costs | 3.2 | 1.1 | 6.3 | |
(Loss) gain on litigation settlement | $ 32.8 | (10.6) | 29.3 | 0 |
Other litigation costs | 2.5 | 4.6 | 5.6 | |
Additional interest expense for Florida LOP regulation change | 4.4 | |||
Derivatives not designated as hedging instruments | ||||
Reconciliation of Adjusted EBITDA: | ||||
(Gain) loss recognized in income | 7.5 | |||
Operating Segments | Surgical Facility Services | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 2,675.8 | 2,470.4 | 2,157.8 | |
Adjusted EBITDA | 544 | 473.6 | 422 | |
Operating Segments | Ancillary Services | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 67.5 | 68.9 | 67.3 | |
Adjusted EBITDA | (3.9) | (2.3) | 1.7 | |
All other | ||||
Segment Reporting Information [Line Items] | ||||
Adjusted EBITDA | $ (102) | $ (91.1) | $ (84.1) |
Segment Reporting - Assets and
Segment Reporting - Assets and Cash Purchases of Property and Equipment by Operating Segment (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Segment Reporting Information [Line Items] | |||
Total assets | $ 6,876.7 | $ 6,682.1 | |
Total cash purchases of property and equipment | 88.8 | 80.6 | $ 57.6 |
Operating Segments | Surgical Facility Services | |||
Segment Reporting Information [Line Items] | |||
Total assets | 6,347.4 | 6,001.1 | |
Total cash purchases of property and equipment | 87.9 | 74.3 | 55 |
Operating Segments | Ancillary Services | |||
Segment Reporting Information [Line Items] | |||
Total assets | 36.3 | 41.7 | |
Total cash purchases of property and equipment | 0.8 | 1.1 | 0.5 |
All other | |||
Segment Reporting Information [Line Items] | |||
Total assets | 493 | 639.3 | |
Total cash purchases of property and equipment | $ 0.1 | $ 5.2 | $ 2.1 |
Subsequent Events (Details)
Subsequent Events (Details) $ in Millions | 1 Months Ended | 12 Months Ended | |
Jan. 31, 2024 USD ($) ambulatory_surgery_center physician_practice | Dec. 31, 2023 physician_practice | Dec. 31, 2021 physician_practice | |
Physician Practices | |||
Subsequent Event [Line Items] | |||
Number of business entities acquired | 4 | 2 | |
Subsequent Event | Ambulatory Surgery Centers And Physician Practices | |||
Subsequent Event [Line Items] | |||
Total aggregate consideration | $ | $ 58.6 | ||
Subsequent Event | Ambulatory Surgery Centers (ASC) | |||
Subsequent Event [Line Items] | |||
Number of business entities acquired | ambulatory_surgery_center | 2 | ||
Subsequent Event | Physician Practices | |||
Subsequent Event [Line Items] | |||
Number of business entities acquired | 9 |