Surgery Partners, Inc. (SGRY)

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Surgery Partners, Inc. (NASDAQ:SGRY)

Q4 2017 Earnings Conference Call

March 1, 2018 8:30 AM ET


Wayne DeVeydt - Chief Executive Officer

David Kretschmer - Chief Strategy and Transformation Officer and Interim CFO


Bill Sutherland - The Benchmark Company

Brian Tanquilut - Jefferies

Frank Morgan - RBC Capital Markets

Chad Vanacore - Stifel, Nicolaus & Company

Ralph Giacobbe - Citigroup



Greetings, and welcome to the Surgery Partners' Fourth Quarter and Full Year 2017 Earnings Conference Call. At this time, all participants will be in a listen only mode. A question and answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded.

It is now my pleasure to introduce your host, David Kretschmer, Interim CFO. Thank you. You may begin.

David Kretschmer

Good morning, and welcome to Surgery Partners' fourth quarter 2017 earnings call. This is David Kretschmer, Chief Strategy and Transformation Officer and Interim CFO. Joining me today is Wayne DeVeydt, our Chief Executive Officer. Before we begin, let me remind everyone that during this call, Surgery Partners' management may make certain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

These include remarks about future expectations, anticipations, beliefs, estimates, plans and prospects. Such statements are subject to a variety of risks, uncertainties and other factors that could cause actual results to differ materially from those indicated or implied by such statements.

Such risks and other factors are set forth in the Company's earnings release posted on the website and provided in our Annual Report on Form 10-K and our quarterly report on Form 10-Q, each is filed with the Securities and Exchange Commission. The Company does not undertake any duty to update such forward-looking statements.

Additionally, during today's call, the Company will discuss non-GAAP measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP.

A reconciliation of adjusted EBITDA and adjusted net income to net earnings calculated under GAAP can be found in our earnings release, which is posted on our website at surgerypartners.com and in our most recent quarterly report on Form 10-Q.

With that, I'll turn the call over to Wayne.

Wayne DeVeydt

Good morning. And thank you for joining the call. I am excited to be here this morning. I just joined Surgery Partners at this unique time for both our company and the industry. But we have much to discuss today. I would first like to share that regarding my decision to join Surgery Partners and the value-creation potential I saw in making this decision.

I will then shift the discussion to some of the key fundamental strategic opportunities that we have for growth and margin improvement over the next few years and some specific initiatives we are undertaking to position us to capitalize on these opportunities.

And finally, I would like to provide some insights into our 2018 outlook and key proof-points that we will be tracking throughout the year to validate our strategy, initiatives and resulting execution.

Let me start by highlighting my reasons for joining Surgery Partners. As many of you are aware, we live in a healthcare industry that continues to have many inter-related but fragmented moving parts. As a result, healthcare cost in the United States continue to rise at levels that are challenging the consumer’s ability to afford the high-quality healthcare every consumer expects and candidly deserves.

Having worked in the healthcare system for over two decades, I’ve had an opportunity to experience first-hand many of the initiatives put forth to drive cost out of the system while improving the patient experience. While there were many success stories around these initiatives, several fell short due to misalignment of priorities and incentives.

This is where Surgery Partners became such a compelling opportunity for me. Specifically, Surgery Partners understands the priority is the consumer, our patients. We can never lose sight of this basic tenet making quality, along with patient safety and satisfaction at the core of what we do each and every day.

Second, our business model aligns with and empowers physicians to provide them with the resources they need to be doctors first. The alignment of the consumer and the physician is paramount to any successful model in healthcare.

But the remaining ingredient is the alignment with payers including both state and federal governments, which control the flow of healthcare dollars and are motivated to remove inappropriate and unnecessary costs from the healthcare system in order to not only protect the integrity of this system, but also to improve on the sustainability of this system.

The ability to bring experience on the payer side of the cost equation, coupled with the unique business model of Surgery Partners, is what drove me to accept the opportunity to lead this great company. Simply put, we are on the right side of the cost equation and fully aligned with the goals and objectives of consumers, physicians and payers.

This alignment is even further strengthened when you consider the overarching macro trends that create tailwinds for our business. These include, an aging population, which aligns well with our focus in orthopedics including total joint and spine procedures, ophthalmology, pain and GI.

Advances in technology around patient safety and improved outcome and the resulting influence in shifting to surgical procedures of the high-quality, low cost ASC setting, which is evident from CMS’s continuing discussions wherein total knee and hip arthroplasty to the ASC payable list.

Read the rest of this transcript for free on seekingalpha.com