|
x
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
47-3620923
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
Title of Class
|
|
Name of Exchange on Which Registered
|
Common Stock, par value $0.01 per share
|
|
NASDAQ Global Select Market
|
Large accelerated filer
o
|
|
Accelerated filer
o
|
Non-accelerated filer
x
|
|
Smaller reporting company
o
|
|
|
|
Page
|
|
|
|
|
|
|
Item 1.
|
Business
|
|
|
|
|
Item 1A.
|
Risk Factors
|
|
|
|
|
Item 1B.
|
Unresolved Staff Comments
|
|
|
|
|
Item 2.
|
Properties
|
|
|
|
|
Item 3.
|
Legal Proceedings
|
|
|
|
|
Item 4.
|
Mine Safety Disclosures
|
|
|
|
|
|
|
|
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
|
|
|
|
Item 6.
|
Selected Financial Data
|
|
|
|
|
Item 7.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
|
|
|
|
Item 7A.
|
Quantitative and Qualitative Disclosure About Market Risk
|
|
|
|
|
Item 8.
|
Financial Statements and Supplementary Data
|
|
|
|
|
Item 9.
|
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
|
|
|
|
|
Item 9A.
|
Controls and Procedures
|
|
|
|
|
Item 9B.
|
Other Information
|
|
|
|
|
PART III
|
||
|
|
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
|
|
|
|
Item 11.
|
Executive Compensation.
|
|
|
|
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
|
|
|
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
|
|
|
|
Item 14.
|
Principal Accounting Fees and Services
|
|
|
|
|
PART IV
|
||
|
|
|
Item 15.
|
Exhibits, Financial Statement Schedules
|
|
|
|
•
|
Deliver Outstanding Patient Care and Clinical Outcomes;
|
•
|
Expand Ancillary Services Across Our National Platform;
|
•
|
Continue to Execute and Expand Upon our Physician Engagement Strategy in Attractive Markets;
|
•
|
Drive Organic Growth at Existing Facilities through Targeted Physician Recruitment, Service Line Expansion and Implementing our Efficient Operating Model;
|
•
|
Continue our Disciplined Acquisition Strategy; and
|
•
|
Introduce New Service Offerings to Provide a More Comprehensive Continuum of Care.
|
Facility / State
|
|
City
|
|
Number of
Operating
Rooms
|
|
Number of
Treatment
Rooms
|
|
Surgery Partners
Percentage
Ownership
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alabama
|
|
|
|
|
|
|
|
|
|
|
Birmingham Surgery Center
|
|
Birmingham
|
|
5
|
|
3
|
|
37
|
%
|
|
Arkansas
|
|
|
|
|
|
|
|
|
|
|
NovaMed Surgery Center of Jonesboro
|
|
Jonesboro
|
|
2
|
|
1
|
|
51
|
%
|
|
California
|
|
|
|
|
|
|
|
|
|
|
Specialty Surgical Center of Beverly Hills / Brighton Way
|
|
Beverly Hills
|
|
3
|
|
1
|
|
26
|
%
|
|
Specialty Surgical Center of Beverly Hills / Wilshire Boulevard
|
|
Beverly Hills
|
|
4
|
|
2
|
|
27
|
%
|
|
Specialty Surgical Center of Encino
|
|
Encino
|
|
4
|
|
2
|
|
34
|
%
|
|
Specialty Surgical Center of Irvine
|
|
Irvine
|
|
4
|
|
1
|
|
52
|
%
|
|
Specialty Surgical Center of Thousand Oaks
|
|
Westlake Village
|
|
4
|
|
2
|
|
20
|
%
|
(1)
|
Center for Outpatient Surgery
|
|
Whittier
|
|
2
|
|
2
|
|
64
|
%
|
|
Colorado
|
|
|
|
|
|
|
|
|
|
|
United Ambulatory Surgery Center
|
|
Colorado Springs
|
|
1
|
|
0
|
|
60
|
%
|
|
NovaMed Surgery Center of Denver
|
|
Denver
|
|
1
|
|
1
|
|
51
|
%
|
|
Animas Surgical Hospital
|
|
Durango
|
|
4
|
|
1
|
|
69
|
%
|
(2)
|
|
|
|
|
|
|
12 Hospital Rooms
|
|
|
|
|
Minimally Invasive Spine Institute
|
|
Lafayette
|
|
2
|
|
1
|
|
40
|
%
|
|
Delaware
|
|
|
|
|
|
|
|
|
|
|
Delaware Outpatient Center for Surgery
|
|
Newark
|
|
4
|
|
4
|
|
51
|
%
|
|
Facility / State
|
|
City
|
|
Number of
Operating
Rooms
|
|
Number of
Treatment
Rooms
|
|
Surgery Partners
Percentage
Ownership
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Florida
|
|
|
|
|
|
|
|
|
|
|
Cape Coral Surgery Center
|
|
Cape Coral
|
|
5
|
|
7
|
|
80
|
%
|
|
Lee Island Coast Surgery Center
|
|
Fort Myers
|
|
5
|
|
3
|
|
43
|
%
|
|
Laser and Outpatient Surgery Center
|
|
Gainesville
|
|
2
|
|
1
|
|
51
|
%
|
|
Jacksonville Beach Surgery Center
|
|
Jacksonville
|
|
4
|
|
1
|
|
81
|
%
|
|
Lake Mary Surgery Center
|
|
Lake Mary
|
|
2
|
|
1
|
|
63
|
%
|
|
Lake Worth Surgical Center
|
|
Lake Worth
|
|
3
|
|
1
|
|
87
|
%
|
|
Palm Beach Outpatient Surgical Center
|
|
Lake Worth
|
|
2
|
|
1
|
|
60
|
%
|
|
Tampa Bay Regional Surgery Center
|
|
Largo
|
|
1
|
|
2
|
|
51
|
%
|
|
West Bay Surgery Center
|
|
Largo
|
|
4
|
|
4
|
|
51
|
%
|
|
Park Place Surgery Center
|
|
Maitland
|
|
2
|
|
1
|
|
94
|
%
|
|
Space Coast Surgery Center
|
|
Merritt Island
|
|
1
|
|
0
|
|
100
|
%
|
|
The Gables Surgical Center
|
|
Miami
|
|
2
|
|
0
|
|
76
|
%
|
|
Miami Surgical Center
|
|
Miami
|
|
6
|
|
1
|
|
58
|
%
|
|
Suncoast Surgery Center
|
|
New Port Richey
|
|
2
|
|
1
|
|
25
|
%
|
(5)
|
The Surgery Center of Ocala
|
|
Ocala
|
|
4
|
|
2
|
|
41
|
%
|
|
Orange City Surgery Center
|
|
Orange City
|
|
2
|
|
1
|
|
51
|
%
|
|
Downtown Surgery Center
|
|
Orlando
|
|
4
|
|
1
|
|
61
|
%
|
|
Millenia Surgery Center
|
|
Orlando
|
|
2
|
|
0
|
|
60
|
%
|
|
Sarasota Ambulatory Surgery Center
|
|
Sarasota
|
|
2
|
|
0
|
|
66
|
%
|
|
Armenia Ambulatory Surgery Center
|
|
Tampa
|
|
2
|
|
4
|
|
94
|
%
|
|
Westchase Surgery Center
|
|
Tampa
|
|
4
|
|
0
|
|
51
|
%
|
|
New Tampa Surgery Center
|
|
Wesley Chapel
|
|
2
|
|
2
|
|
61
|
%
|
|
Georgia
|
|
|
|
|
|
|
|
|
|
|
Atlanta Eye Surgery Center
|
|
Atlanta
|
|
2
|
|
1
|
|
100
|
%
|
|
Premier Surgery Center
|
|
Brunswick
|
|
3
|
|
0
|
|
63
|
%
|
|
Coastal Pain Centers
|
|
Brunswick
|
|
1
|
|
0
|
|
15
|
%
|
(5)
|
The Surgery Center
|
|
Columbus
|
|
4
|
|
2
|
|
63
|
%
|
|
Coastal Pain Centers
|
|
Vidalia
|
|
1
|
|
0
|
|
15
|
%
|
(5)
|
Hawaii
|
|
|
|
|
|
|
|
|
|
|
Honolulu Spine Center
|
|
Honolulu
|
|
2
|
|
0
|
|
41
|
%
|
|
Idaho
|
|
|
|
|
|
|
|
|
|
|
Mountain View Hospital
|
|
Idaho Falls
|
|
10
|
|
2
|
|
62
|
%
|
(2)
|
|
|
|
|
|
|
43 hospital rooms
|
|
|
|
|
Illinois
|
|
|
|
|
|
|
|
|
|
|
NovaMed Eye Surgery Center -Northshore
|
|
Chicago
|
|
1
|
|
1
|
|
67
|
%
|
|
Eyes of Illinois Surgery Center
|
|
Maryville
|
|
1
|
|
1
|
|
48
|
%
|
(5)
|
Center for Reconstructive Surgery
|
|
Oak Lawn
|
|
4
|
|
0
|
|
57
|
%
|
|
NovaMed Surgery Center of River Forest
|
|
River Forest
|
|
2
|
|
0
|
|
51
|
%
|
|
Valley Ambulatory Surgery Center
|
|
St. Charles
|
|
7
|
|
1
|
|
44
|
%
|
|
Indiana
|
|
|
|
|
|
|
|
|
|
|
Surgical Center of New Albany
|
|
New Albany
|
|
3
|
|
1
|
|
53
|
%
|
|
NovaMed Eye Surgery Center of New Albany
|
|
New Albany
|
|
2
|
|
1
|
|
51
|
%
|
|
Kansas
|
|
|
|
|
|
|
|
|
|
|
NovaMed Eye Surgery Center of Overland Park
|
|
Overland Park
|
|
4
|
|
1
|
|
51
|
%
|
|
Cypress Surgery Center
|
|
Wichita
|
|
6
|
|
5
|
|
52
|
%
|
|
Kentucky
|
|
|
|
|
|
|
|
|
|
|
DuPont Surgery Center
|
|
Louisville
|
|
5
|
|
0
|
|
70
|
%
|
|
Louisiana
|
|
|
|
|
|
|
|
|
|
Facility / State
|
|
City
|
|
Number of
Operating
Rooms
|
|
Number of
Treatment
Rooms
|
|
Surgery Partners
Percentage
Ownership
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interventional Pain Management Center
|
|
Baton Rouge
|
|
4
|
|
0
|
|
51
|
%
|
|
Physicians Medical Center
|
|
Houma
|
|
5
|
|
8
|
|
57
|
%
|
(2)
|
|
|
|
|
|
|
30 hospital rooms
|
|
|
|
|
Michigan
|
|
|
|
|
|
|
|
|
|
|
The Cataract Specialty Surgical Center
|
|
Berkley
|
|
2
|
|
1
|
|
51
|
%
|
|
Surgery Center of Kalamazoo
|
|
Portage
|
|
4
|
|
0
|
|
64
|
%
|
|
Mississippi
|
|
|
|
|
|
|
|
|
|
|
DeSoto Surgery Center
|
|
DeSoto
|
|
2
|
|
1
|
|
—
|
%
|
(3)
|
Physicians Outpatient Center
|
|
Oxford
|
|
4
|
|
2
|
|
—
|
%
|
(3)
|
Missouri
|
|
|
|
|
|
|
|
|
|
|
St. Louis Women's Surgery Center
|
|
Ballwin
|
|
3
|
|
0
|
|
62
|
%
|
|
Orthopedic Ambulatory Surgery Center of Chesterfield
|
|
Chesterfield
|
|
4
|
|
1
|
|
12
|
%
|
(1)
|
Timberlake Surgery Center
|
|
Chesterfield
|
|
4
|
|
1
|
|
62
|
%
|
|
NovaMed Eye Surgery Center of North County
|
|
Florissant
|
|
1
|
|
0
|
|
100
|
%
|
|
Central Missouri Medical Park Surgical Center
|
|
Jefferson City
|
|
4
|
|
1
|
|
40
|
%
|
|
Blue Ridge Surgical Center
|
|
Kansas City
|
|
2
|
|
1
|
|
51
|
%
|
|
St. Peters Ambulatory Surgery Center
|
|
St. Peters
|
|
2
|
|
0
|
|
54
|
%
|
|
St. Louis Spine and Orthopedic Surgery Center
|
|
Town and Country
|
|
3
|
|
1
|
|
56
|
%
|
|
NovaMed Surgery Center of Warrensburg
|
|
Warrensburg
|
|
2
|
|
1
|
|
51
|
%
|
|
Montana
|
|
|
|
|
|
|
|
|
|
|
Great Falls Clinic Medical Center
|
|
Great Falls
|
|
3
|
|
20 hospital rooms
|
|
50
|
%
|
(2)
|
Great Falls Clinic Surgery Center
|
|
Great Falls
|
|
3
|
|
2
|
|
93
|
%
|
|
Nebraska
|
|
|
|
|
|
|
|
|
|
|
Surgery Center of Fremont
|
|
Fremont
|
|
1
|
|
1
|
|
51
|
%
|
|
New Hampshire
|
|
|
|
|
|
|
|
|
|
|
New Hampshire Eye SurgiCenter
|
|
Bedford
|
|
1
|
|
0
|
|
67
|
%
|
|
Nashua Eye Surgery Center
|
|
Nashua
|
|
2
|
|
0
|
|
51
|
%
|
|
North Carolina
|
|
|
|
|
|
|
|
|
|
|
Orthopaedic Surgery Center of Asheville
|
|
Asheville
|
|
3
|
|
0
|
|
54
|
%
|
|
Wilmington SurgCare
|
|
Wilmington
|
|
7
|
|
3
|
|
72
|
%
|
|
North Dakota
|
|
|
|
|
|
|
|
|
|
|
Grand Forks Surgery Center
|
|
Grand Forks
|
|
1
|
|
0
|
|
51
|
%
|
|
Ohio
|
|
|
|
|
|
|
|
|
|
|
Surgery Center of Sandusky
|
|
Sandusky
|
|
1
|
|
1
|
|
60
|
%
|
|
Valley Surgery Center
|
|
Steubenville
|
|
3
|
|
1
|
|
34
|
%
|
|
Pennsylvania
|
|
|
|
|
|
|
|
|
|
|
The Center for Specialized Surgery
|
|
Bethlehem
|
|
2
|
|
2
|
|
63
|
%
|
|
Village SurgiCenter of Erie
|
|
Erie
|
|
5
|
|
1
|
|
71
|
%
|
|
Crozer Keystone Surgery Center at Haverford
|
|
Haverford
|
|
5
|
|
1
|
|
—
|
%
|
(1)(4)
|
Physicians Surgical Center
|
|
Lebanon
|
|
3
|
|
1
|
|
67
|
%
|
|
Rhode Island
|
|
|
|
|
|
|
|
|
|
|
East Greenwich Endoscopy Center
|
|
East Greenwich
|
|
0
|
|
4
|
|
45
|
%
|
|
East Bay Endoscopy Center
|
|
Portsmouth
|
|
0
|
|
1
|
|
75
|
%
|
|
Bayside Endoscopy Center
|
|
Providence
|
|
0
|
|
6
|
|
75
|
%
|
|
Ocean State Endoscopy Center
|
|
Providence
|
|
0
|
|
3
|
|
54
|
%
|
|
Tennessee
|
|
|
|
|
|
|
|
|
|
|
Renaissance Surgery Center
|
|
Bristol
|
|
2
|
|
1
|
|
46
|
%
|
|
NovaMed Surgery Center of Chattanooga
|
|
Chattanooga
|
|
1
|
|
1
|
|
52
|
%
|
|
Facility / State
|
|
City
|
|
Number of
Operating
Rooms
|
|
Number of
Treatment
Rooms
|
|
Surgery Partners
Percentage
Ownership
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Surgery Center of Cleveland
|
|
Cleveland
|
|
2
|
|
1
|
|
64
|
%
|
|
Cool Springs Surgery Center
|
|
Franklin
|
|
5
|
|
2
|
|
36
|
%
|
(1)
|
Germantown Surgery Center
|
|
Germantown
|
|
6
|
|
1
|
|
—
|
%
|
(3)
|
Physicians Surgery Center
|
|
Jackson
|
|
4
|
|
1
|
|
20
|
%
|
(1)
|
East Memphis Surgery Center
|
|
Memphis
|
|
6
|
|
2
|
|
—
|
%
|
(3)
|
UroCenter
|
|
Memphis
|
|
3
|
|
0
|
|
—
|
%
|
(3)
|
Union City Surgery Center
|
|
Union City
|
|
2
|
|
1
|
|
—
|
%
|
(3)
|
Texas
|
|
|
|
|
|
|
|
|
|
|
Lubbock Heart and Surgical Hospital
|
|
Lubbock
|
|
10
|
|
8
|
|
60
|
%
|
(2)
|
|
|
|
|
|
|
74 hospital rooms
|
|
|
|
|
American Surgery Center of South Texas
|
|
San Antonio
|
|
2
|
|
1
|
|
65
|
%
|
|
Texarkana Surgery Center
|
|
Texarkana
|
|
4
|
|
3
|
|
58
|
%
|
|
The Cataract Center of East Texas
|
|
Tyler
|
|
2
|
|
0
|
|
60
|
%
|
|
Washington
|
|
|
|
|
|
|
|
|
|
|
Bellingham Ambulatory Surgery Center
|
|
Bellingham
|
|
3
|
|
0
|
|
79
|
%
|
|
Microsurgical Spine Center
|
|
Puyallup
|
|
1
|
|
1
|
|
60
|
%
|
|
Wisconsin
|
|
|
|
|
|
|
|
|
|
|
NovaMed Surgery Center of Madison
|
|
Madison
|
|
2
|
|
0
|
|
51
|
%
|
|
(1)
|
We do not consolidate this surgical facility for financial reporting purposes.
|
(2)
|
This surgical facility is licensed as a hospital.
|
(3)
|
We manage this surgical facility, but do not have ownership in the facility.
|
(4)
|
We hold a 48% non-consolidating ownership interest in a management service company that provides various management services to this surgical facility. We also have a management services agreement with the management service company.
|
(5)
|
This facility is a variable interest entity and is consolidated for financial reporting purposes.
|
▪
|
Baptist Memorial Health Services, Inc. (“Baptist Memorial”), for which we manage six surgical facilities in Memphis, Tennessee and surrounding areas;
|
▪
|
Crozer-Keystone Health Systems, for which we manage and operate a surgical facility in Havertown, Pennsylvania;
|
▪
|
Lee Health Ventures, with which we own and operate a surgical facility in Ft. Myers, Florida;
|
▪
|
Munroe Regional Health Systems, with which we own and operate a surgical facility in Ocala, Florida;
|
▪
|
Trinity Health System, with which we own and operate a surgical facility in Steubenville, Ohio;
|
▪
|
UCLA Health, with which we own and operate a surgical facility in Encino, California;
|
▪
|
Vanderbilt Health Services, Inc., with which we own and operate a surgical facility in Franklin, Tennessee; and
|
▪
|
Wellmont Health Systems, with which we own and operate a surgical facility in Bristol, Tennessee.
|
•
|
Diagnostic Laboratory:
We offer physicians both toxicology and DNA testing services through our diagnostic laboratory, Logan Laboratories ("Logan Labs"), a wholly-owned subsidiary of the Company based in Tampa, Florida. Advanced toxicology screening provides physicians with the ability to identify when a patient is taking too much of a prescribed substance, when a patient is non-compliant with a prescribed substance or when a patient is taking unprescribed or illicit substances. Logan Labs provides quantitative confirmation testing of all drugs requested within 24 hours of receipt of a specimen, and results are available the following business day. Certified clinical chemists provide detailed laboratory reports that summarize and identify inconsistencies relating to test results and a patient's prescribed medications. The goal of our DNA testing services is to provide testing that helps guide physicians to the best treatment plan based on a patient’s DNA profile. Testing also ensures that regular toxicology screenings are appropriately interpreted. We intend to broaden our diagnostic laboratory offerings in support of the needs of our physicians across our existing specialties and new service lines.
|
•
|
Multi-Specialty Physician Practices:
We employ two models in connection with our network of physician practices. In the state of Florida, where the law does not preclude a business corporation from employing physicians, we own and operate Tampa Pain Relief Center, Inc., a wholly-owned subsidiary with several locations throughout Florida. In states other than Florida, we operate physician practices pursuant to long-term management service agreements with separate professional corporations that are wholly-owned by physicians. We derive revenues from these practice operations through management fees and expense reimbursement as set forth in the management services agreements. As of
December 31, 2015
, we owned or operated
46
physician practices with facilities in nine states. In total, through our physician practices, we employed over
100
physicians who focus on a number of specialties. We also provide our physician practices with relief from scheduling, billing and collections, staffing, regulatory compliance and other administrative and operational activities to allow them to focus on patient care.
|
•
|
Urgent Care Facilities:
Our urgent care facilities primarily treat injuries or illnesses requiring immediate care, but not serious enough to require an emergency room visit. Urgent care centers have become an increasingly viable alternative for patients as wait times for both primary care and emergency care providers continue to rise. Our urgent care facilities fill an access gap by providing walk-in care, especially during evening and weekend hours. In addition to the convenience they provide patients, our urgent care facilities also offer one of the lowest cost settings for both patients and payors. As the demands on primary care providers increase and insurance coverage expands, the urgent care industry is expected to continue growing. As of
December 31, 2015
, we owned and operated
eight
urgent care facilities in proximity to our surgical hospitals. Our urgent care facilities provide support and additional access points to our surgical hospitals. The fragmentation in the urgent care market creates significant room for consolidation and growth.
|
•
|
Specialty Pharmacy Services:
Our specialty pharmacy service line supports our physicians and provides expansion opportunities across multiple specialties within our delivery system, including ENT, GI, general surgery, ophthalmology, orthopedic, cardiology and pain management specialties. Our specialty pharmacy service line allows us to maintain control of quality and compliance with treatment programs. To ensure a high standard of care and appropriately expand these offerings, we have hired experienced pharmacists to supervise operations of our specialty pharmacy service offerings, which include compounding to meet the unique needs of our patients and distribution of these complex medications. Our specialty pharmacy service line affords us the ability to expand services across new specialties, such as infusion therapy and sterile products and support future growth into new service lines.
|
|
|
Year Ended December 31,
|
|||||||
|
|
2015
|
|
2014
|
|
2013
|
|||
|
|
|
|
|
|
|
|||
Private Insurance
|
|
55.0
|
%
|
|
52.1
|
%
|
|
60.6
|
%
|
Government
|
|
38.2
|
%
|
|
34.5
|
%
|
|
28.0
|
%
|
Self-pay
|
|
1.7
|
%
|
|
3.5
|
%
|
|
2.8
|
%
|
Other
|
|
5.1
|
%
|
|
9.9
|
%
|
|
8.6
|
%
|
Total patient service revenues
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
•
|
The ambulatory surgery center must be certified to participate in the Medicare program, and its operating and recovery room space must be dedicated exclusively to the center and not a part of a hospital (although such space may be leased from a hospital if such lease meets the requirements of the safe harbor for space rental).
|
•
|
Each investor must be either (a) a physician who derived at least one-third of his or her medical practice income for the previous fiscal year or 12-month period from performing procedures on the list of Medicare-covered procedures for ASCs, (b) a hospital, or (c) a person or entity not in a position to make or influence referrals to the center, nor to provide items or services to the center, nor employed by the center or any investor.
|
•
|
Unless all physician-investors are members of a single specialty, each physician-investor must perform at least one-third of his or her procedures at the ambulatory surgery center each year. This requirement is in addition to the requirement that the physician-investor has derived at least one-third of his or her medical practice income for the past year from performing procedures.
|
•
|
Physician-investors must have fully informed their referred patients of the physician’s investment.
|
•
|
The terms on which an investment interest is offered to an investor are not related to the previous or expected volume of referrals, services furnished or the amount of business otherwise generated from that investor to the entity.
|
•
|
Neither the ambulatory surgery center nor any other investor nor any person acting on their behalf may loan funds to or guarantee a loan for an investor if the investor uses any part of such loan to obtain the investment interest.
|
•
|
The amount of payment to an investor in return for the investment interest is directly proportional to the amount of the capital investment (including the fair market value of any pre-operational services rendered) of that investor.
|
•
|
All physician-investors, any hospital-investor and the center agree to treat patients receiving benefits or assistance under a federal healthcare program in a non-discriminatory manner.
|
•
|
All ancillary services performed at the ambulatory surgery center for beneficiaries of federal healthcare programs must be directly and integrally related to primary procedures performed at the center and may not be billed separately.
|
•
|
No hospital-investor may include on its cost report or any claim for payment from a federal healthcare program any costs associated with the ambulatory surgery center.
|
•
|
The ambulatory surgery center may not use equipment owned by or services provided by a hospital-investor unless such equipment is leased in accordance with a lease that complies with the Anti-Kickback Statute equipment rental safe harbor and such services are provided in accordance with a contract that complies with the Anti-Kickback Statute personal services and management contract safe harbor.
|
•
|
No hospital-investor may be in a position to make or influence referrals directly or indirectly to any other investor or the center.
|
•
|
clinical laboratory services;
|
•
|
physical therapy services;
|
•
|
occupational therapy services;
|
•
|
radiology services, including magnetic resonance imaging, computerized axial tomography scan and ultrasound services;
|
•
|
radiation therapy services and supplies;
|
•
|
durable medical equipment and supplies;
|
•
|
parenteral and enteral nutrients, equipment and supplies;
|
•
|
prosthetics, orthotics and prosthetic devices and supplies;
|
•
|
home health services;
|
•
|
outpatient prescription drugs; and
|
•
|
inpatient and outpatient hospital services.
|
•
|
a prohibition on hospitals from having any physician ownership unless the hospital already had physician ownership and a Medicare provider agreement in effect as of December 31, 2010;
|
•
|
a limitation on the percentage of total physician ownership or investment interests in the hospital or entity whose assets include the hospital to the percentage of physician ownership or investment as of March 23, 2010;
|
•
|
a prohibition from expanding the number of beds, operating rooms, and procedure rooms for which it is licensed after March 23, 2010, unless the hospital obtains an exception from the Secretary;
|
•
|
a requirement that return on investment be proportionate to the investment by each investor;
|
•
|
restrictions on preferential treatment of physician versus non-physician investors;
|
•
|
a requirement for written disclosures of physician ownership interests to the hospital’s patients and on the hospital’s website and in any advertising, along with annual reports to the government detailing such interests;
|
•
|
a prohibition on the hospital or other investors from providing financing to physician investors;
|
•
|
a requirement that any hospital that does not have 24/7 physician coverage inform patients of this fact and receive signed acknowledgments from the patients of the disclosure; and
|
•
|
a prohibition on “grandfathered” status for any physician owned hospital that converted from an ASC to a hospital on or after March 23, 2010.
|
•
|
makes our facilities’ business associates directly liable for compliance with certain of HIPAA’s requirements;
|
•
|
makes our facilities liable for violations by their business associates if HHS determines an agency relationship exists between the facility and the business associate under federal agency law;
|
•
|
adds limitations on the use and disclosure of health information for marketing and fund-raising purposes, and prohibits the sale of protected health information without individual authorization;
|
•
|
expands our patients’ rights to receive electronic copies of their health information and to restrict disclosures to a health plan concerning treatment for which our patient has paid out of pocket in full;
|
•
|
requires modifications to, and redistribution of, our facilities’ notice of privacy practices;
|
•
|
requires modifications to existing agreements with business associates;
|
•
|
adopts the additional HITECH Act provisions not previously adopted addressing enforcement of noncompliance with HIPAA due to willful neglect;
|
•
|
incorporates the increased and tiered civil money penalty structure provided by the HITECH Act; and
|
•
|
revises the HIPAA privacy rule to increase privacy protections for genetic information as required by the Genetic Information Nondiscrimination Act of 2008.
|
•
|
the collapse or insolvency of our insurance carriers;
|
•
|
further increases in premiums and deductibles;
|
•
|
increases in the number of liability claims against us or the cost of settling or trying cases related to those claims; or
|
•
|
an inability to obtain one or more types of insurance on acceptable terms, if at all.
|
•
|
disputes between payors as to which party is responsible for payment;
|
•
|
failure of information systems and processes to submit and collect claims in a timely manner;
|
•
|
variation in coverage for similar services among various payors;
|
•
|
the difficulty of adherence to specific compliance requirements, diagnosis coding and other procedures mandated by various payors; and
|
•
|
failure to obtain proper physician credentialing and documentation in order to bill various payors.
|
•
|
making it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply with the obligations under any of our debt instruments, including restrictive covenants, could result in an event of default under such instruments;
|
•
|
making us more vulnerable to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;
|
•
|
limiting cash flow available for general corporate purposes, including capital expenditures and acquisitions, because a substantial portion of our cash flow from operations must be dedicated to servicing our debt;
|
•
|
limiting our ability to obtain additional debt financing in the future for working capital, capital expenditures or acquisitions;
|
•
|
limiting our flexibility in reacting to competitive and other changes in our industry and economic conditions generally; and
|
•
|
exposing us to risks inherent in interest rate fluctuations because some of our borrowings will be at variable rates of interest, which could result in higher interest expense in the event of increases in interest rates.
|
•
|
incur additional indebtedness;
|
•
|
make certain distributions, investments and other restricted payments;
|
•
|
dispose of our assets;
|
•
|
grant liens on our assets;
|
•
|
engage in transactions with affiliates;
|
•
|
merge, consolidate or transfer substantially all of our assets; and
|
•
|
make payments to us (in the case of our restricted subsidiaries).
|
•
|
changes in the valuation of our deferred tax assets and liabilities;
|
•
|
expected timing and amount of the release of any tax valuation allowances;
|
•
|
tax effects of equity-based compensation;
|
•
|
costs related to intercompany restructurings;
|
•
|
changes in tax laws, regulations or interpretations thereof; or
|
•
|
lower than anticipated future earnings in jurisdictions where we have lower statutory tax rates and higher than anticipated future
|
•
|
earnings in jurisdictions where we have higher statutory tax rates.
|
•
|
ownership and control of our facilities;
|
•
|
operating policies and procedures;
|
•
|
qualification, training and supervision of medical and support persons;
|
•
|
pricing of, billing for and coding of services and properly handling overpayments, debt collection practices and the submission of false statements or claims;
|
•
|
the necessity, appropriateness and adequacy of medical care, equipment, personnel, operating policies and procedures; maintenance and preservation of medical records;
|
•
|
financial arrangements between referral sources and our facilities;
|
•
|
the protection of privacy, including patient and credit card information;
|
•
|
screening, stabilization and transfer of individuals who have emergency medical conditions and provision of emergency services;
|
•
|
antitrust;
|
•
|
building codes;
|
•
|
workplace health and safety;
|
•
|
licensure, certification and accreditation;
|
•
|
fee-splitting and the corporate practice of medicine;
|
•
|
handling of medication;
|
•
|
confidentiality, data breach, identity theft and maintenance and protection of health-related and other personal information and medical records; and
|
•
|
environmental protection, health and safety.
|
•
|
make illegal the referral of Medicare or other patients to our surgical facilities by physician investors;
|
•
|
create a substantial likelihood that cash distributions to physician investors from the partnerships or limited liability companies through which we operate our surgical facilities would be illegal;
|
•
|
make illegal the ownership by the physician investors of interests in the partnerships or limited liability companies through which we own and operate our surgical facilities; or
|
•
|
require us to reduce the aggregate percentage of physician investor ownership in our hospitals.
|
•
|
the requirement that a majority of the board of directors consist of independent directors;
|
•
|
the requirement that we have a nominating/corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and
|
•
|
the requirement that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.
|
•
|
variations in our operating performance and the performance of our competitors;
|
•
|
actual or anticipated fluctuations in our quarterly or annual operating results;
|
•
|
publication of research reports by securities analysts about us or our competitors or our industry;
|
•
|
announcements by us, our competitors or our vendors of significant contracts, acquisitions, joint marketing relationships, joint ventures or capital commitments;
|
•
|
our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give to the market;
|
•
|
additions and departures of key personnel;
|
•
|
strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy;
|
•
|
the passage of legislation or other regulatory developments affecting us or our industry;
|
•
|
speculation in the press or investment community;
|
•
|
changes in accounting principles;
|
•
|
terrorist acts, acts of war or periods of widespread civil unrest;
|
•
|
natural disasters and other calamities; and
|
•
|
changes in general market and economic conditions.
|
|
|
Year Ended December 31,
|
||||||||||||||
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||
Consolidated Statements of Operations Data:
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
|
$
|
959,891
|
|
|
$
|
403,289
|
|
|
$
|
284,599
|
|
|
$
|
260,215
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
||||||||
Cost of revenues
|
|
669,326
|
|
|
254,178
|
|
|
169,844
|
|
|
159,346
|
|
||||
General and administrative expenses
|
|
55,992
|
|
|
31,452
|
|
|
26,339
|
|
|
25,263
|
|
||||
Depreciation and amortization
|
|
34,545
|
|
|
15,061
|
|
|
11,663
|
|
|
11,208
|
|
||||
Provision for doubtful accounts
|
|
23,578
|
|
|
9,509
|
|
|
5,885
|
|
|
3,073
|
|
||||
Income from equity investments
|
|
(3,777
|
)
|
|
(1,264
|
)
|
|
—
|
|
|
—
|
|
||||
(Gain) loss on disposal or impairment of long-lived assets, net
|
|
(2,097
|
)
|
|
1,804
|
|
|
2,482
|
|
|
832
|
|
||||
Loss on debt extinguishment
|
|
16,102
|
|
|
23,414
|
|
|
9,863
|
|
|
—
|
|
||||
Merger transaction and integration costs
|
|
17,920
|
|
|
21,690
|
|
|
—
|
|
|
—
|
|
||||
Termination of management agreement and IPO costs
|
|
5,834
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Electronic health records incentive income
|
|
(1,761
|
)
|
|
(3,356
|
)
|
|
—
|
|
|
—
|
|
||||
Other (income) expenses
|
|
(525
|
)
|
|
(6
|
)
|
|
297
|
|
|
40
|
|
||||
Total operating expenses
|
|
815,137
|
|
|
352,482
|
|
|
226,373
|
|
|
199,762
|
|
||||
Operating income
|
|
144,754
|
|
|
50,807
|
|
|
58,226
|
|
|
60,453
|
|
||||
Tax receivable agreement expense
|
|
(119,911
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Interest expense, net
|
|
(100,980
|
)
|
|
(62,101
|
)
|
|
(32,929
|
)
|
|
(28,482
|
)
|
||||
(Loss) income before income taxes
|
|
(76,137
|
)
|
|
(11,294
|
)
|
|
25,297
|
|
|
31,971
|
|
||||
Income tax (benefit) expense
|
|
(148,982
|
)
|
|
15,758
|
|
|
7,570
|
|
|
6,110
|
|
||||
Net income (loss)
|
|
72,845
|
|
|
(27,052
|
)
|
|
17,727
|
|
|
25,861
|
|
||||
Less: Net income attributable to non-controlling interests
|
|
(71,416
|
)
|
|
(38,845
|
)
|
|
(26,789
|
)
|
|
(23,945
|
)
|
||||
Net income (loss) attributable to Surgery Partners, Inc.
|
|
$
|
1,429
|
|
|
$
|
(65,897
|
)
|
|
$
|
(9,062
|
)
|
|
$
|
1,916
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per share attributable to common stockholders
|
|
|
|
|
|
|
||||||||||
Basic
|
|
0.04
|
|
|
(2.04
|
)
|
|
(0.28
|
)
|
|
0.06
|
|
||||
Diluted
(1)
|
|
0.04
|
|
|
(2.04
|
)
|
|
(0.28
|
)
|
|
0.06
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Consolidated Statements of Cash Flow Data:
|
|
|
|
|
|
|
|
|
||||||||
Net cash provided by operating activities
|
|
$
|
84,481
|
|
|
$
|
21,949
|
|
|
$
|
49,078
|
|
|
$
|
46,377
|
|
Net cash used in investing activities
|
|
(134,842
|
)
|
|
(271,016
|
)
|
|
(3,622
|
)
|
|
(3,468
|
)
|
||||
Net cash provided by (used in) financing activities
|
|
33,374
|
|
|
310,961
|
|
|
(37,662
|
)
|
|
(43,061
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other Data:
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA
(2)
|
|
$
|
158,053
|
|
|
$
|
77,034
|
|
|
$
|
57,900
|
|
|
$
|
50,959
|
|
Adjusted EBITDA as a % of revenues
|
|
16.5
|
%
|
|
19.1
|
%
|
|
20.3
|
%
|
|
19.6
|
%
|
||||
Number of surgical facilities as of the end of period
(3)
|
|
101
|
|
|
103
|
|
|
47
|
|
|
49
|
|
||||
Number of consolidated surgical facilities included as of the end of period
|
|
90
|
|
|
91
|
|
|
47
|
|
|
49
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2015
|
|
2014
|
|
2013
|
||||||
|
|
|
|
|
|
|
||||||
Consolidated Balance Sheets Data:
|
|
|
|
|
|
|
||||||
Working capital
|
|
$
|
129,643
|
|
|
$
|
127,258
|
|
|
$
|
40,056
|
|
Total assets
|
|
2,106,684
|
|
|
1,858,794
|
|
|
474,701
|
|
|||
Long-term debt, less current maturities
|
|
1,230,328
|
|
|
1,339,266
|
|
|
418,559
|
|
|||
Total stockholders’ equity (deficit)
|
|
297,927
|
|
|
29,536
|
|
|
(14,375
|
)
|
(1)
|
The impact of potentially dilutive securities for the
years ended
December 31,
2014
and
2013
was not considered because the effect would be anti-dilutive in each of those periods.
|
(2)
|
When we use the term “ Adjusted EBITDA,” we are referring to net income
minus
(a) net income attributable to non-controlling interests
plus
(b) income tax (benefit) expense, (c) interest expense, net, (d) depreciation and amortization, (e) management fee, (f) merger transaction, integration and practice acquisition costs, (g) termination of management agreement and IPO costs, (h) tax receivable agreement expense, (i) non-cash stock compensation expense, (j) loss on debt extinguishment and (k) (gain) loss on disposal of investments and long-lived assets. Non-controlling interests represent the interests of third parties, such as physicians, and in some cases, healthcare systems that own an interest in surgical facilities that we consolidate for financial reporting purposes.
|
(3)
|
Includes surgical facilities that we manage but in which we have no ownership interest.
|
|
|
Year Ended December 31,
|
|||||||
|
|
2015
|
|
2014
|
|
2013
|
|||
Patient service revenues:
|
|
|
|
|
|
|
|||
Surgical facilities revenues
|
|
91.6
|
%
|
|
83.9
|
%
|
|
78.9
|
%
|
Ancillary services revenues
|
|
6.4
|
%
|
|
12.3
|
%
|
|
15.5
|
%
|
|
|
98.0
|
%
|
|
96.2
|
%
|
|
94.4
|
%
|
Other service revenues:
|
|
|
|
|
|
|
|||
Optical services revenues
|
|
1.5
|
%
|
|
3.5
|
%
|
|
5.6
|
%
|
Other
|
|
0.5
|
%
|
|
0.3
|
%
|
|
—
|
%
|
|
|
2.0
|
%
|
|
3.8
|
%
|
|
5.6
|
%
|
Total revenues
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
Year Ended December 31,
|
|||||||
|
|
2015
|
|
2014
|
|
2013
|
|||
|
|
|
|
|
|
|
|||
Private insurance payors
|
|
55.0
|
%
|
|
52.1
|
%
|
|
60.6
|
%
|
Government payors
|
|
38.2
|
%
|
|
34.5
|
%
|
|
28.0
|
%
|
Self-pay payors
|
|
1.7
|
%
|
|
3.5
|
%
|
|
2.8
|
%
|
Other payors
(1)
|
|
5.1
|
%
|
|
9.9
|
%
|
|
8.6
|
%
|
Total
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
Year Ended December 31,
|
|||||||
|
|
2015
|
|
2014
|
|
2013
|
|||
|
|
|
|
|
|
|
|||
Cardiology
|
|
1.0
|
%
|
|
0.3
|
%
|
|
—
|
%
|
Otolaryngology
|
|
4.1
|
%
|
|
2.8
|
%
|
|
2.5
|
%
|
Gastrointestinal
|
|
22.2
|
%
|
|
15.0
|
%
|
|
10.7
|
%
|
General surgery
|
|
2.9
|
%
|
|
2.9
|
%
|
|
2.4
|
%
|
Obstetrics/gynecology
|
|
1.9
|
%
|
|
0.6
|
%
|
|
—
|
%
|
Ophthalmology
|
|
30.0
|
%
|
|
40.7
|
%
|
|
47.6
|
%
|
Orthopedic
|
|
12.1
|
%
|
|
11.6
|
%
|
|
10.8
|
%
|
Pain management
|
|
17.6
|
%
|
|
21.5
|
%
|
|
22.2
|
%
|
Plastic surgery
|
|
2.1
|
%
|
|
2.0
|
%
|
|
2.2
|
%
|
Other
|
|
6.1
|
%
|
|
2.6
|
%
|
|
1.6
|
%
|
Total
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
Year Ended December 31,
|
||||||
|
|
2015
|
|
2014
|
||||
|
|
|
|
|
|
|
||
Cases
|
|
400,230
|
|
|
380,623
|
|
||
Case growth
|
|
5.2
|
%
|
|
N/A
|
|
||
Revenue per case
|
|
$
|
2,484
|
|
|
$
|
2,360
|
|
Revenue per case growth
|
|
5.3
|
%
|
|
N/A
|
|
||
Number of facilities
|
|
92
|
|
|
N/A
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2015
|
|
2014
|
|
2013
|
||||||
Net Revenues:
|
|
|
|
|
|
|
||||||
Surgical facility services
|
|
$
|
884,144
|
|
|
$
|
339,309
|
|
|
$
|
224,578
|
|
Ancillary services
|
|
61,175
|
|
|
49,787
|
|
|
44,103
|
|
|||
Optical services
|
|
14,572
|
|
|
14,193
|
|
|
15,918
|
|
|||
Total revenues
|
|
$
|
959,891
|
|
|
$
|
403,289
|
|
|
$
|
284,599
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2015
|
|
2014
|
|
2013
|
||||||
Segment Operating Income:
|
|
|
|
|
|
|
||||||
Surgical facility services
|
|
$
|
224,098
|
|
|
$
|
112,237
|
|
|
$
|
77,905
|
|
Ancillary services
|
|
15,666
|
|
|
16,389
|
|
|
16,909
|
|
|||
Optical services
|
|
2,283
|
|
|
2,238
|
|
|
3,032
|
|
|||
Total
|
|
$
|
242,047
|
|
|
$
|
130,864
|
|
|
$
|
97,846
|
|
|
|
|
|
|
|
|
||||||
General and administrative
|
|
$
|
(59,534
|
)
|
|
$
|
(33,149
|
)
|
|
$
|
(27,275
|
)
|
Gain (loss) on disposal or impairment of long-lived assets, net
|
|
2,097
|
|
|
(1,804
|
)
|
|
(2,482
|
)
|
|||
Loss on debt extinguishment
|
|
(16,102
|
)
|
|
(23,414
|
)
|
|
(9,863
|
)
|
|||
Merger transaction and integration costs
|
|
(17,920
|
)
|
|
(21,690
|
)
|
|
—
|
|
|||
Termination of management agreement and IPO costs
|
|
(5,834
|
)
|
|
—
|
|
|
—
|
|
|||
Total operating income
|
|
$
|
144,754
|
|
|
$
|
50,807
|
|
|
$
|
58,226
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2015
|
|
2014
|
|
2013
|
||||||
Supplemental Information:
|
|
|
|
|
|
|
||||||
Depreciation and amortization:
|
|
|
|
|
|
|
||||||
Surgical facility services
|
|
$
|
27,447
|
|
|
$
|
9,911
|
|
|
$
|
7,405
|
|
Ancillary services
|
|
1,934
|
|
|
1,812
|
|
|
1,460
|
|
|||
Optical services
|
|
1,622
|
|
|
1,641
|
|
|
1,862
|
|
|||
Total
|
|
$
|
31,003
|
|
|
$
|
13,364
|
|
|
$
|
10,727
|
|
|
|
|
|
|
|
|
||||||
General and administrative
|
|
$
|
3,542
|
|
|
$
|
1,697
|
|
|
$
|
936
|
|
Total depreciation and amortization
|
|
$
|
34,545
|
|
|
$
|
15,061
|
|
|
$
|
11,663
|
|
|
|
December 31, 2015
|
|
December 31, 2014
|
||||
Assets:
|
|
|
|
|
||||
Surgical facility services
|
|
$
|
1,762,396
|
|
|
$
|
1,638,874
|
|
Ancillary services
|
|
118,198
|
|
|
70,370
|
|
||
Optical services
|
|
25,537
|
|
|
25,876
|
|
||
Total
|
|
$
|
1,906,131
|
|
|
$
|
1,735,120
|
|
|
|
|
|
|
||||
General and administrative
|
|
$
|
200,553
|
|
|
$
|
123,674
|
|
Total assets
|
|
$
|
2,106,684
|
|
|
$
|
1,858,794
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2015
|
|
2014
|
|
2013
|
||||||
Supplemental Information:
|
|
|
|
|
|
|
||||||
Cash purchases of property and equipment, net:
|
|
|
|
|
|
|
||||||
Surgical facility services
|
|
$
|
26,723
|
|
|
$
|
5,158
|
|
|
2,301
|
|
|
Ancillary services
|
|
1,051
|
|
|
1,034
|
|
|
562
|
|
|||
Optical services
|
|
128
|
|
|
335
|
|
|
161
|
|
|||
Total
|
|
$
|
27,902
|
|
|
$
|
6,527
|
|
|
$
|
3,024
|
|
|
|
|
|
|
|
|
||||||
General and administrative
|
|
$
|
5,537
|
|
|
$
|
1,209
|
|
|
$
|
1,126
|
|
Total cash purchases of property and equipment, net
|
|
$
|
33,439
|
|
|
$
|
7,736
|
|
|
$
|
4,150
|
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
|
2015
|
|
2014
|
|
2013
|
|||||||||||||||
|
|
Amount
|
|
% of Revenues
|
|
Amount
|
|
% of Revenues
|
|
Amount
|
|
% of Revenues
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Revenues
|
|
$
|
959,891
|
|
|
100.0
|
%
|
|
$
|
403,289
|
|
|
100.0
|
%
|
|
$
|
284,599
|
|
|
100.0
|
%
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of revenues
|
|
669,326
|
|
|
69.7
|
%
|
|
254,178
|
|
|
63.0
|
%
|
|
169,844
|
|
|
59.7
|
%
|
|||
General and administrative expenses
|
|
55,992
|
|
|
5.8
|
%
|
|
31,452
|
|
|
7.8
|
%
|
|
26,339
|
|
|
9.3
|
%
|
|||
Depreciation and amortization
|
|
34,545
|
|
|
3.6
|
%
|
|
15,061
|
|
|
3.7
|
%
|
|
11,663
|
|
|
4.1
|
%
|
|||
Provision for doubtful accounts
|
|
23,578
|
|
|
2.5
|
%
|
|
9,509
|
|
|
2.4
|
%
|
|
5,885
|
|
|
2.1
|
%
|
|||
Income from equity investments
|
|
(3,777
|
)
|
|
(0.4
|
)%
|
|
(1,264
|
)
|
|
(0.3
|
)%
|
|
—
|
|
|
—
|
%
|
|||
(Gain) loss on disposal or impairment of long-lived assets, net
|
|
(2,097
|
)
|
|
(0.2
|
)%
|
|
1,804
|
|
|
0.4
|
%
|
|
2,482
|
|
|
0.9
|
%
|
|||
Loss on debt extinguishment
|
|
16,102
|
|
|
1.7
|
%
|
|
23,414
|
|
|
5.8
|
%
|
|
9,863
|
|
|
3.5
|
%
|
|||
Merger transaction and integration costs
|
|
17,920
|
|
|
1.9
|
%
|
|
21,690
|
|
|
5.4
|
%
|
|
—
|
|
|
—
|
%
|
|||
Termination of management agreement and IPO costs
|
|
5,834
|
|
|
0.6
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|||
Electronic health records incentive income
|
|
(1,761
|
)
|
|
(0.2
|
)%
|
|
(3,356
|
)
|
|
(0.8
|
)%
|
|
—
|
|
|
—
|
%
|
|||
Other (income) expenses
|
|
(525
|
)
|
|
(0.1
|
)%
|
|
(6
|
)
|
|
—
|
%
|
|
297
|
|
|
0.1
|
%
|
|||
Total operating expenses
|
|
815,137
|
|
|
84.9
|
%
|
|
352,482
|
|
|
87.4
|
%
|
|
226,373
|
|
|
79.5
|
%
|
|||
Operating income
|
|
144,754
|
|
|
15.1
|
%
|
|
50,807
|
|
|
12.6
|
%
|
|
58,226
|
|
|
20.5
|
%
|
|||
Tax receivable agreement expense
|
|
(119,911
|
)
|
|
(12.5
|
)%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|||
Interest expense, net
|
|
(100,980
|
)
|
|
(10.5
|
)%
|
|
(62,101
|
)
|
|
(15.4
|
)%
|
|
(32,929
|
)
|
|
(11.6
|
)%
|
|||
(Loss) income before income taxes
|
|
(76,137
|
)
|
|
(7.9
|
)%
|
|
(11,294
|
)
|
|
(2.8
|
)%
|
|
25,297
|
|
|
8.9
|
%
|
|||
Income tax (benefit) expense
|
|
(148,982
|
)
|
|
(15.5
|
)%
|
|
15,758
|
|
|
3.9
|
%
|
|
7,570
|
|
|
2.7
|
%
|
|||
Net income (loss)
|
|
72,845
|
|
|
7.6
|
%
|
|
(27,052
|
)
|
|
(6.7
|
)%
|
|
17,727
|
|
|
6.2
|
%
|
|||
Less: Net income attributable to non-controlling interests
|
|
(71,416
|
)
|
|
(7.4
|
)%
|
|
(38,845
|
)
|
|
(9.6
|
)%
|
|
(26,789
|
)
|
|
(9.4
|
)%
|
|||
Net income (loss) attributable to Surgery Partners, Inc.
|
|
$
|
1,429
|
|
|
0.1
|
%
|
|
$
|
(65,897
|
)
|
|
(16.3
|
)%
|
|
$
|
(9,062
|
)
|
|
(3.2
|
)%
|
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
|
2015
|
|
2014
|
|
Dollar
Variance
|
|
Percent
Variance
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
Patient service revenues
|
|
$
|
940,711
|
|
|
$
|
388,073
|
|
|
$
|
552,638
|
|
|
142.4
|
%
|
Optical service revenues
|
|
14,572
|
|
|
14,193
|
|
|
380
|
|
|
2.7
|
%
|
|||
Other service revenues
|
|
4,608
|
|
|
1,023
|
|
|
3,585
|
|
|
350.4
|
%
|
|||
Total revenues
|
|
$
|
959,891
|
|
|
$
|
403,289
|
|
|
$
|
556,602
|
|
|
138.0
|
%
|
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
|
2014
|
|
2013
|
|
Dollar
Variance
|
|
Percent
Variance
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
Patient service revenues
|
|
$
|
388,073
|
|
|
$
|
268,681
|
|
|
$
|
119,392
|
|
|
44.4
|
%
|
Optical service revenues
|
|
14,193
|
|
|
15,918
|
|
|
(1,725
|
)
|
|
(10.8
|
)%
|
|||
Other service revenues
|
|
1,023
|
|
|
—
|
|
|
1,023
|
|
|
—
|
%
|
|||
Total revenues
|
|
$
|
403,289
|
|
|
$
|
284,599
|
|
|
$
|
118,690
|
|
|
41.7
|
%
|
|
|
December 31, 2015
|
|
December 31,
2014 |
|
December 31,
2013 |
||||||
2014 Revolver Loan
|
|
$
|
125,250
|
|
|
$
|
—
|
|
|
$
|
—
|
|
2014 First Lien Credit Agreement, dated November 3, 2014, maturing November 3, 2020, net of debt issuance and discount of $20,223 and $23,818 at December 31, 2015 and 2014, respectively
|
|
841,078
|
|
|
846,183
|
|
|
—
|
|
|||
2014 Second Lien Credit Agreement, dated November 3, 2014, maturing November 3, 2021, net of debt issuance and discount of $8,159 and $18,184 at December 31, 2015 and 2014, respectively
|
|
238,341
|
|
|
471,816
|
|
|
—
|
|
|||
2013 First Lien Credit Agreement, dated April 11, 2013, maturing April 11, 2019, net of debt issuance and discount of $6,385 at December 31, 2013
|
|
—
|
|
|
—
|
|
|
303,890
|
|
|||
2013 Second Lien Credit Agreement, dated April 11, 2013, maturing April 11, 2020, net of debt issuance and discount of $4,733 at December 31, 2013
|
|
—
|
|
|
—
|
|
|
115,267
|
|
|||
Subordinated Notes
|
|
1,000
|
|
|
1,000
|
|
|
1,000
|
|
|||
Notes payable and secured loans
|
|
40,615
|
|
|
31,600
|
|
|
3,590
|
|
|||
Capital lease obligations
|
|
11,316
|
|
|
10,755
|
|
|
3,654
|
|
|||
Total debt
|
|
1,257,600
|
|
|
1,361,354
|
|
|
427,401
|
|
|||
Less: Current maturities
|
|
27,272
|
|
|
22,088
|
|
|
8,842
|
|
|||
Total long-term debt
|
|
$
|
1,230,328
|
|
|
$
|
1,339,266
|
|
|
$
|
418,559
|
|
•
|
$80.0 million
revolving credit facility ("2014 Revolver Loan")
|
•
|
$870.0 million
1st lien term loan facility ("2014 First Lien Credit Agreement")
|
•
|
$490.0 million
2nd lien term loan facility ("2014 Second Lien Credit Agreement")
|
January 1, 2016 through December 31, 2016
|
|
3,767
|
|
|
January 1, 2017 through December 31, 2017
|
|
3,927
|
|
|
January 1, 2018 through December 31, 2018
|
|
4,107
|
|
|
January 1, 2019 through December 31, 2019
|
|
4,299
|
|
|
January 1, 2020 through November 3, 2020
|
|
4,123
|
|
|
Total discount on Senior Secured Notes
|
|
$
|
20,223
|
|
January 1, 2016 through December 31, 2016
|
1,102
|
|
|
January 1, 2017 through December 31, 2017
|
1,207
|
|
|
January 1, 2018 through December 31, 2018
|
1,325
|
|
|
January 1, 2019 through December 31, 2019
|
1,455
|
|
|
January 1, 2020 through November 30, 2020
|
1,602
|
|
|
January 1, 2021 through November 3, 2021
|
1,468
|
|
|
Total discount on Senior Secured Notes
|
$
|
8,159
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2015
|
|
2014
|
|
2013
|
||||||
Consolidated Statements of Operations Data (in thousands):
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
72,845
|
|
|
$
|
(27,052
|
)
|
|
$
|
17,727
|
|
(Minus):
|
|
|
|
|
|
|
||||||
Net income attributable to non-controlling interests
|
|
71,416
|
|
|
38,845
|
|
|
26,789
|
|
|||
Plus (minus):
|
|
|
|
|
|
|
||||||
Income tax (benefit) expense
|
|
(148,982
|
)
|
|
15,758
|
|
|
7,570
|
|
|||
Interest expense, net
|
|
100,980
|
|
|
62,101
|
|
|
32,929
|
|
|||
Depreciation and amortization
|
|
34,545
|
|
|
15,061
|
|
|
11,663
|
|
|||
|
|
|
|
|
|
|
||||||
EBITDA
|
|
(12,028
|
)
|
|
27,023
|
|
|
43,100
|
|
|||
Plus:
|
|
|
|
|
|
|
||||||
Management fee
(1)
|
|
2,250
|
|
|
2,161
|
|
|
2,000
|
|
|||
Merger transaction, integration and practice acquisition costs
|
|
20,579
|
|
|
21,690
|
|
|
—
|
|
|||
Termination of management agreement and IPO costs
|
|
5,834
|
|
|
—
|
|
|
—
|
|
|||
Tax receivable agreement expense
|
|
119,911
|
|
|
—
|
|
|
—
|
|
|||
Non-cash stock compensation expense
|
|
7,502
|
|
|
942
|
|
|
455
|
|
|||
Loss on debt extinguishment
|
|
16,102
|
|
|
23,414
|
|
|
9,863
|
|
|||
(Gain) loss on disposal of investments and long-lived assets, net
|
|
(2,097
|
)
|
|
1,804
|
|
|
2,482
|
|
|||
|
|
|
|
|
|
|
||||||
Adjusted EBITDA
|
|
$
|
158,053
|
|
|
$
|
77,034
|
|
|
$
|
57,900
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
|
Total
|
|
Less than 1 year
|
|
1-3 years
|
|
4-5 years
|
|
More than 5 years
|
||||||||||
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt, including current maturities
|
|
$
|
1,274,666
|
|
|
$
|
23,102
|
|
|
$
|
40,354
|
|
|
$
|
963,226
|
|
|
$
|
247,985
|
|
Cash interest obligations
|
|
347,397
|
|
|
68,564
|
|
|
133,704
|
|
|
127,261
|
|
|
17,868
|
|
|||||
Capital lease obligations
|
|
11,316
|
|
|
4,170
|
|
|
5,408
|
|
|
1,692
|
|
|
47
|
|
|||||
Operating lease obligations
|
|
256,392
|
|
|
36,443
|
|
|
62,740
|
|
|
47,078
|
|
|
110,131
|
|
|||||
Other financing obligations
(1)
|
|
54,892
|
|
|
965
|
|
|
3,158
|
|
|
4,546
|
|
|
46,223
|
|
|||||
Total contractual obligations
|
|
$
|
1,944,663
|
|
|
$
|
133,244
|
|
|
$
|
245,364
|
|
|
$
|
1,143,803
|
|
|
$
|
422,254
|
|
(1)
|
Other financing obligations include a payable to the hospital facility lessor at our surgical hospital located in Idaho Falls, Idaho relating to the land, building and improvements at this facility and a payable to the facility lessor in Ocala, Florida relating to the building at this facility.
|
•
|
The ASC must be an ASC certified to participate in the Medicare program, and its operating and recovery room space must be dedicated exclusively to the ASC and not a part of a hospital (although such space may be leased from a hospital if such lease meets the requirements of the safe harbor for space rental).
|
•
|
Each investor must be either (a) a physician who derived at least one-third of his or her medical practice income for the previous fiscal year or 12-month period from performing procedures on the list of Medicare-covered procedures for ASCs, (b) a hospital, or (c) a person or entity not in a position to make or influence referrals to the center, nor to provide items or services to the ASC, nor employed by the ASC or any investor.
|
•
|
Unless all physician-investors are members of a single specialty, each physician-investor must perform at least one-third of his or her procedures at the ASC each year. This requirement is in addition to the requirement that the physician-investor has derived at least one-third of his or her medical practice income for the past year from performing procedures.
|
•
|
Physician-investors must have fully informed their referred patients of the physician’s investment.
|
•
|
The terms on which an investment interest is offered to an investor are not related to the previous or expected volume of referrals, services furnished or the amount of business otherwise generated from that investor to the entity.
|
•
|
Neither the ASC nor any other investor nor any person acting on their behalf may loan funds to or guarantee a loan for an investor if the investor uses any part of such loan to obtain the investment interest.
|
•
|
The amount of payment to an investor in return for the investment interest is directly proportional to the amount of the capital investment (including the fair market value of any pre-operational services rendered) of that investor.
|
•
|
All physician-investors, any hospital-investor and the center agree to treat patients receiving benefits or assistance under a federal healthcare program in a non-discriminatory manner.
|
•
|
All ancillary services performed at the ASC for beneficiaries of federal healthcare programs must be directly and integrally related to primary procedures performed at the ASC and may not be billed separately.
|
•
|
No hospital-investor may include on its cost report or any claim for payment from a federal healthcare program any costs associated with the ASC.
|
•
|
The ASC may not use equipment owned by or services provided by a hospital-investor unless such equipment is leased in accordance with a lease that complies with the Anti-Kickback Statute equipment rental safe harbor and such services are provided in accordance with a contract that complies with the Anti-Kickback Statute personal services and management contract safe harbor.
|
•
|
No hospital-investor may be in a position to make or influence referrals directly or indirectly to any other investor or the ASC.
|
•
|
clinical laboratory services;
|
•
|
physical therapy services;
|
•
|
occupational therapy services;
|
•
|
radiology services, including magnetic resonance imaging, computerized axial tomography scan and ultrasound services;
|
•
|
radiation therapy services and supplies;
|
•
|
durable medical equipment and supplies;
|
•
|
parenteral and enteral nutrients, equipment and supplies;
|
•
|
prosthetics, orthotics and prosthetic devices and supplies;
|
•
|
home health services;
|
•
|
outpatient prescription drugs; and
|
•
|
inpatient and outpatient hospital services.
|
•
|
a prohibition on hospitals from having any physician ownership unless the hospital already had physician ownership and a Medicare provider agreement in effect as of December 31, 2010;
|
•
|
a limitation on the percentage of total physician ownership or investment interests in the hospital or entity whose assets include the hospital to the percentage of physician ownership or investment as of March 23, 2010;
|
•
|
a prohibition from expanding the number of beds, operating rooms, and procedure rooms for which it is licensed after March 23, 2010, unless the hospital obtains an exception from the Secretary;
|
•
|
a requirement that return on investment be proportionate to the investment by each investor;
|
•
|
restrictions on preferential treatment of physician versus non-physician investors;
|
•
|
a requirement for written disclosures of physician ownership interests to the hospital’s patients and on the hospital’s website and in any advertising, along with annual reports to the government detailing such interests;
|
•
|
a prohibition on the hospital or other investors from providing financing to physician investors;
|
•
|
a requirement that any hospital that does not have 24/7 physician coverage inform patients of this fact and receive signed acknowledgments from the patients of the disclosure; and
|
•
|
a prohibition on “grandfathered” status for any physician owned hospital that converted from an ASC to a hospital on or after March 23, 2010.
|
•
|
makes our facilities’ business associates directly liable for compliance with certain of HIPAA’s requirements;
|
•
|
makes our facilities liable for violations by their business associates if HHS determines an agency relationship exists between the facility and the business associate under federal agency law;
|
•
|
adds limitations on the use and disclosure of health information for marketing and fund-raising purposes, and prohibits the sale of protected health information without individual authorization;
|
•
|
expands our patients’ rights to receive electronic copies of their health information and to restrict disclosures to a health plan concerning treatment for which our patient has paid out of pocket in full;
|
•
|
requires modifications to, and redistribution of, our facilities’ notice of privacy practices;
|
•
|
requires modifications to existing agreements with business associates;
|
•
|
adopts the additional HITECH Act provisions not previously adopted addressing enforcement of noncompliance with HIPAA due to willful neglect;
|
•
|
incorporates the increased and tiered civil money penalty structure provided by the HITECH Act; and
|
•
|
revises the HIPAA privacy rule to increase privacy protections for genetic information as required by the Genetic Information Nondiscrimination Act of 2008.
|
|
Page
|
|
|
Report of Independent Registered Public Accounting Firm
|
|
|
|
Report of Independent Registered Public Accounting Firm
|
|
|
|
Consolidated Balance Sheets- December 31, 2015 and 2014
|
|
|
|
Consolidated Statements of Operations- for the years ended December 31, 2015, 2014 and 2013
|
|
|
|
Consolidated Statements of Comprehensive Income (Loss)- for the years ended December 31, 2015, 2014 and 2013
|
|
|
|
Consolidated Statements of Stockholders' Equity (Deficit)- for the years ended December 31, 2015, 2014 and 2013
|
|
|
|
Consolidated Statements of Cash Flows- for the years ended December 31, 2015, 2014 and 2013
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
December 31, 2015
|
|
December 31, 2014
|
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
57,933
|
|
|
$
|
74,920
|
|
Accounts receivable, less allowance for doubtful accounts of $18,322 and $5,329, respectively
|
|
177,757
|
|
|
144,960
|
|
||
Inventories
|
|
25,591
|
|
|
23,692
|
|
||
Prepaid expenses and other current assets
|
|
34,620
|
|
|
24,005
|
|
||
Acquisition escrow deposit
|
|
13,984
|
|
|
—
|
|
||
Indemnification receivable due from seller
|
|
1,072
|
|
|
1,072
|
|
||
Total current assets
|
|
310,957
|
|
|
268,649
|
|
||
Property and equipment, net
|
|
184,550
|
|
|
175,006
|
|
||
Intangible assets, net
|
|
53,568
|
|
|
54,888
|
|
||
Goodwill
|
|
1,407,927
|
|
|
1,298,753
|
|
||
Investments in and advances to affiliates
|
|
34,103
|
|
|
33,441
|
|
||
Restricted invested assets
|
|
316
|
|
|
316
|
|
||
Long-term deferred tax assets
|
|
94,105
|
|
|
—
|
|
||
Acquisition escrow deposit
|
|
8,408
|
|
|
16,232
|
|
||
Debt issuance costs
|
|
4,246
|
|
|
5,630
|
|
||
Other long-term assets
|
|
8,504
|
|
|
5,879
|
|
||
Total assets
|
|
$
|
2,106,684
|
|
|
$
|
1,858,794
|
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
45,341
|
|
|
$
|
43,063
|
|
Accrued payroll and benefits
|
|
26,307
|
|
|
22,370
|
|
||
Acquisition escrow liability
|
|
13,984
|
|
|
—
|
|
||
Other current liabilities
|
|
68,410
|
|
|
53,870
|
|
||
Current maturities of long-term debt
|
|
27,272
|
|
|
22,088
|
|
||
Total current liabilities
|
|
181,314
|
|
|
141,391
|
|
||
Long-term debt, less current maturities
|
|
1,230,328
|
|
|
1,339,266
|
|
||
Long-term tax receivable agreement liability
|
|
119,655
|
|
|
—
|
|
||
Long-term deferred tax liabilities
|
|
—
|
|
|
49,170
|
|
||
Acquisition escrow liability
|
|
8,408
|
|
|
16,232
|
|
||
Other long-term liabilities
|
|
85,613
|
|
|
90,610
|
|
||
|
|
|
|
|
||||
Non-controlling interests—redeemable
|
|
183,439
|
|
|
192,589
|
|
||
|
|
|
|
|
||||
Stockholders' equity:
|
|
|
|
|
||||
Preferred stock, $0.01 par value, 20,000,000 shares authorized, no shares issued at December 31, 2015; no shares authorized, issued or outstanding at December 31, 2014
(1)
|
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value, 300,000,000 shares authorized, 48,156,990 shares issued and outstanding at December 31, 2015; 1,000 shares authorized, issued and outstanding at December 31, 2014
(1)
|
|
482
|
|
|
—
|
|
||
Additional paid-in capital
|
|
316,294
|
|
|
58,151
|
|
||
Retained deficit
|
|
(320,804
|
)
|
|
(322,233
|
)
|
||
Total Surgery Partners, Inc. stockholders' deficit
|
|
(4,028
|
)
|
|
(264,082
|
)
|
||
Non-controlling interests—non-redeemable
|
|
301,955
|
|
|
293,618
|
|
||
Total stockholders' equity
|
|
297,927
|
|
|
29,536
|
|
||
Total liabilities and stockholders' equity
|
|
$
|
2,106,684
|
|
|
$
|
1,858,794
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2015
|
|
2014
|
|
2013
|
||||||
|
|
|
|
|
|
|
||||||
Revenues
|
|
$
|
959,891
|
|
|
$
|
403,289
|
|
|
$
|
284,599
|
|
Operating expenses:
|
|
|
|
|
|
|
||||||
Salaries and benefits
|
|
261,685
|
|
|
101,976
|
|
|
70,923
|
|
|||
Supplies
|
|
242,083
|
|
|
94,224
|
|
|
63,726
|
|
|||
Professional and medical fees
|
|
66,583
|
|
|
18,028
|
|
|
7,372
|
|
|||
Lease expense
|
|
44,848
|
|
|
19,389
|
|
|
14,048
|
|
|||
Other operating expenses
|
|
54,127
|
|
|
20,561
|
|
|
13,775
|
|
|||
Cost of revenues
|
|
669,326
|
|
|
254,178
|
|
|
169,844
|
|
|||
General and administrative expenses
|
|
55,992
|
|
|
31,452
|
|
|
26,339
|
|
|||
Depreciation and amortization
|
|
34,545
|
|
|
15,061
|
|
|
11,663
|
|
|||
Provision for doubtful accounts
|
|
23,578
|
|
|
9,509
|
|
|
5,885
|
|
|||
Income from equity investments
|
|
(3,777
|
)
|
|
(1,264
|
)
|
|
—
|
|
|||
(Gain) loss on disposal or impairment of long-lived assets, net
|
|
(2,097
|
)
|
|
1,804
|
|
|
2,482
|
|
|||
Loss on debt extinguishment
|
|
16,102
|
|
|
23,414
|
|
|
9,863
|
|
|||
Merger transaction and integration costs
|
|
17,920
|
|
|
21,690
|
|
|
—
|
|
|||
Termination of management agreement and IPO costs
|
|
5,834
|
|
|
—
|
|
|
—
|
|
|||
Electronic health records incentive income
|
|
(1,761
|
)
|
|
(3,356
|
)
|
|
—
|
|
|||
Other (income) expenses
|
|
(525
|
)
|
|
(6
|
)
|
|
297
|
|
|||
Total operating expenses
|
|
815,137
|
|
|
352,482
|
|
|
226,373
|
|
|||
Operating income
|
|
144,754
|
|
|
50,807
|
|
|
58,226
|
|
|||
Tax receivable agreement expense
|
|
(119,911
|
)
|
|
—
|
|
|
—
|
|
|||
Interest expense, net
|
|
(100,980
|
)
|
|
(62,101
|
)
|
|
(32,929
|
)
|
|||
(Loss) income before income taxes
|
|
(76,137
|
)
|
|
(11,294
|
)
|
|
25,297
|
|
|||
Income tax (benefit) expense
|
|
(148,982
|
)
|
|
15,758
|
|
|
7,570
|
|
|||
Net income (loss)
|
|
72,845
|
|
|
(27,052
|
)
|
|
17,727
|
|
|||
Less: Net income attributable to non-controlling interests
|
|
(71,416
|
)
|
|
(38,845
|
)
|
|
(26,789
|
)
|
|||
Net income (loss) attributable to Surgery Partners, Inc.
|
|
$
|
1,429
|
|
|
$
|
(65,897
|
)
|
|
$
|
(9,062
|
)
|
|
|
|
|
|
|
|
||||||
Net income (loss) per share attributable to common stockholders
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
0.04
|
|
|
$
|
(2.04
|
)
|
|
$
|
(0.28
|
)
|
Diluted
(1)
|
|
$
|
0.04
|
|
|
$
|
(2.04
|
)
|
|
$
|
(0.28
|
)
|
Weighted average common shares outstanding
(2)
|
|
|
|
|
|
|
||||||
Basic
|
|
36,066,233
|
|
|
32,295,364
|
|
|
31,815,520
|
|
|||
Diluted
(1)
|
|
37,464,387
|
|
|
32,295,364
|
|
|
31,815,520
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2015
|
|
2014
|
|
2013
|
||||||
|
|
|
|
|
|
|
||||||
Net income (loss)
|
|
$
|
72,845
|
|
|
$
|
(27,052
|
)
|
|
$
|
17,727
|
|
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Comprehensive income (loss)
|
|
$
|
72,845
|
|
|
$
|
(27,052
|
)
|
|
$
|
17,727
|
|
Less: Comprehensive income attributable to non-controlling interests
|
|
(71,416
|
)
|
|
(38,845
|
)
|
|
(26,789
|
)
|
|||
Comprehensive income (loss) attributable to Surgery Partners, Inc.
|
|
$
|
1,429
|
|
|
$
|
(65,897
|
)
|
|
$
|
(9,062
|
)
|
|
Common Stock
(1)
|
|
Additional
Paid-in Capital
|
|
Retained Deficit
|
|
Non-Controlling Interests—
Non-Redeemable
|
|
Total
|
|||||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance as of December 31, 2012
|
1,000
|
|
|
$
|
—
|
|
|
$
|
59,061
|
|
|
$
|
(23,261
|
)
|
|
$
|
88,305
|
|
|
$
|
124,105
|
|
Net (loss) income
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,062
|
)
|
|
26,789
|
|
|
17,727
|
|
|||||
Equity-based compensation
|
—
|
|
|
—
|
|
|
455
|
|
|
—
|
|
|
—
|
|
|
455
|
|
|||||
Acquisition and disposal of shares of non-controlling interests, net
|
—
|
|
|
—
|
|
|
203
|
|
|
—
|
|
|
(599
|
)
|
|
(396
|
)
|
|||||
Distributions to owners
|
—
|
|
|
—
|
|
|
|
|
(131,013
|
)
|
|
—
|
|
|
(131,013
|
)
|
||||||
Distributions to non-controlling interest—non-redeemable holders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(25,253
|
)
|
|
(25,253
|
)
|
|||||
Balance as of December 31, 2013
|
1,000
|
|
|
$
|
—
|
|
|
$
|
59,719
|
|
|
$
|
(163,336
|
)
|
|
$
|
89,242
|
|
|
$
|
(14,375
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net (loss) income
|
—
|
|
|
—
|
|
|
—
|
|
|
(65,897
|
)
|
|
34,766
|
|
|
(31,131
|
)
|
|||||
Equity-based compensation
|
—
|
|
|
—
|
|
|
942
|
|
|
—
|
|
|
—
|
|
|
942
|
|
|||||
Acquisition and disposal of shares of non-controlling interests, net
|
—
|
|
|
—
|
|
|
633
|
|
|
—
|
|
|
202,024
|
|
|
202,657
|
|
|||||
Distributions to owners
|
—
|
|
|
—
|
|
|
—
|
|
|
(93,000
|
)
|
|
—
|
|
|
(93,000
|
)
|
|||||
Distributions to non-controlling interests—non-redeemable holders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(32,414
|
)
|
|
(32,414
|
)
|
|||||
Repurchase of units
|
—
|
|
|
—
|
|
|
(3,143
|
)
|
|
—
|
|
|
—
|
|
|
(3,143
|
)
|
|||||
Balance as of December 31, 2014
|
1,000
|
|
|
$
|
—
|
|
|
$
|
58,151
|
|
|
$
|
(322,233
|
)
|
|
$
|
293,618
|
|
|
$
|
29,536
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
1,429
|
|
|
53,800
|
|
|
55,229
|
|
|||||
Equity-based compensation
|
—
|
|
|
—
|
|
|
7,502
|
|
|
—
|
|
|
—
|
|
|
7,502
|
|
|||||
Acquisition and disposal of shares of non-controlling interests, net
|
—
|
|
|
—
|
|
|
(835
|
)
|
|
—
|
|
|
4,321
|
|
|
3,486
|
|
|||||
Distributions to non-controlling interests—non-redeemable holders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(49,784
|
)
|
|
(49,784
|
)
|
|||||
Initial public offering
|
14,285,000
|
|
|
143
|
|
|
250,836
|
|
|
|
|
|
|
250,979
|
|
|||||||
Effect of Reorganization
(2)
|
33,870,990
|
|
|
339
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
339
|
|
|||||
Other
|
|
|
|
|
640
|
|
|
|
|
|
|
640
|
|
|||||||||
Balance as of December 31, 2015
|
48,156,990
|
|
|
$
|
482
|
|
|
$
|
316,294
|
|
|
$
|
(320,804
|
)
|
|
$
|
301,955
|
|
|
$
|
297,927
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2015
|
|
2014
|
|
2013
|
||||||
|
|
|
|
|
|
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
72,845
|
|
|
$
|
(27,052
|
)
|
|
$
|
17,727
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Depreciation and amortization
|
|
34,545
|
|
|
15,061
|
|
|
11,663
|
|
|||
Amortization of debt issuance costs and discounts
|
|
6,263
|
|
|
3,746
|
|
|
2,430
|
|
|||
Goodwill impairment
|
|
—
|
|
|
—
|
|
|
581
|
|
|||
Amortization of unfavorable lease liability
|
|
(431
|
)
|
|
(72
|
)
|
|
—
|
|
|||
Equity-based compensation
|
|
7,502
|
|
|
942
|
|
|
455
|
|
|||
(Gain) loss on disposal or impairment of long-lived assets, net
|
|
(2,097
|
)
|
|
1,804
|
|
|
2,482
|
|
|||
Loss on debt extinguishment
|
|
16,102
|
|
|
23,414
|
|
|
9,863
|
|
|||
Tax receivable agreement expense
|
|
119,911
|
|
|
—
|
|
|
—
|
|
|||
Deferred income taxes
|
|
(149,891
|
)
|
|
14,089
|
|
|
7,136
|
|
|||
Interest on contingent consideration obligation
|
|
1,041
|
|
|
964
|
|
|
892
|
|
|||
Provision for doubtful accounts
|
|
23,578
|
|
|
9,509
|
|
|
5,885
|
|
|||
Income from equity investments, net of distributions received
|
|
(543
|
)
|
|
(713
|
)
|
|
—
|
|
|||
Changes in operating assets and liabilities, net of acquisitions and divestitures:
|
|
|
|
|
|
|
||||||
Accounts receivable
|
|
(48,783
|
)
|
|
(20,161
|
)
|
|
(9,722
|
)
|
|||
Other operating assets and liabilities
|
|
4,439
|
|
|
418
|
|
|
(314
|
)
|
|||
Net cash provided by operating activities
|
|
84,481
|
|
|
21,949
|
|
|
49,078
|
|
|||
|
|
|
|
|
|
|
||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
||||||
Purchases of property and equipment, net
|
|
(33,439
|
)
|
|
(7,736
|
)
|
|
(4,150
|
)
|
|||
Payments for acquisitions, net of cash acquired
|
|
(112,596
|
)
|
|
(263,280
|
)
|
|
(486
|
)
|
|||
Proceeds from divestitures
|
|
11,193
|
|
|
—
|
|
|
1,014
|
|
|||
Net cash used in investing activities
|
|
(134,842
|
)
|
|
(271,016
|
)
|
|
(3,622
|
)
|
|||
|
|
|
|
|
|
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
||||||
Proceeds from initial public offering, net of offering costs
|
|
250,979
|
|
|
—
|
|
|
—
|
|
|||
Principal payments on long-term debt
|
|
(328,329
|
)
|
|
(1,009,874
|
)
|
|
(339,908
|
)
|
|||
Borrowings of long-term debt
|
|
196,366
|
|
|
1,477,288
|
|
|
462,983
|
|
|||
Payments of debt issuance costs
|
|
—
|
|
|
(7,496
|
)
|
|
(4,974
|
)
|
|||
Penalty on prepayment of debt
|
|
(7,305
|
)
|
|
—
|
|
|
—
|
|
|||
Payment of premium of debt extinguishment
|
|
—
|
|
|
(17,840
|
)
|
|
—
|
|
|||
Distributions to non-controlling interest holders
|
|
(69,720
|
)
|
|
(35,182
|
)
|
|
(25,253
|
)
|
|||
Distribution to owners
|
|
—
|
|
|
(93,000
|
)
|
|
(131,013
|
)
|
|||
Payments related to ownership transactions with consolidated affiliates
|
|
(12,175
|
)
|
|
278
|
|
|
503
|
|
|||
Repurchase of units
|
|
—
|
|
|
(3,143
|
)
|
|
—
|
|
|||
Financing lease obligation
|
|
3,558
|
|
|
(70
|
)
|
|
—
|
|
|||
Net cash provided by (used in) financing activities
|
|
33,374
|
|
|
310,961
|
|
|
(37,662
|
)
|
|||
Net (decrease) increase in cash and cash equivalents
|
|
(16,987
|
)
|
|
61,894
|
|
|
7,794
|
|
|||
Cash and cash equivalents at beginning of period
|
|
74,920
|
|
|
13,026
|
|
|
5,232
|
|
|||
Cash and cash equivalents at end of period
|
|
$
|
57,933
|
|
|
$
|
74,920
|
|
|
$
|
13,026
|
|
|
|
|
|
|
|
|
||||||
Supplemental cash flow information:
|
|
|
|
|
|
|
||||||
Non-cash transactions:
|
|
|
|
|
|
|
||||||
Notes payable issued in connection with an acquisition
|
|
$
|
7,430
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Increase in debt related to new capital lease obligations
|
|
5,443
|
|
|
3,252
|
|
|
1,054
|
|
|||
Cash payments:
|
|
|
|
|
|
|
||||||
Interest paid, net of interest income received
|
|
96,799
|
|
|
50,377
|
|
|
31,101
|
|
|||
Cash paid for income taxes
|
|
1,093
|
|
|
676
|
|
|
538
|
|
Balance at December 31, 2013
|
|
$
|
—
|
|
Net income attributable to non-controlling interests—redeemable
|
|
4,079
|
|
|
Acquisition and disposal of shares of non-controlling interests, net—redeemable
|
|
191,278
|
|
|
Distributions to non-controlling interest —redeemable holders
|
|
(2,768
|
)
|
|
Balance at December 31, 2014
|
|
192,589
|
|
|
Net income attributable to non-controlling interests—redeemable
|
|
17,616
|
|
|
Acquisition and disposal of shares of non-controlling interests, net—redeemable
|
|
(6,830
|
)
|
|
Distributions to non-controlling interest —redeemable holders
|
|
(19,936
|
)
|
|
Balance at December 31, 2015
|
|
$
|
183,439
|
|
|
|
Carrying Amount
|
|
Fair Value
|
||||||||||||
|
|
December 31,
2015 |
|
December 31,
2014 |
|
December 31,
2015 |
|
December 31,
2014 |
||||||||
|
|
|
|
|
|
|
|
|
||||||||
2014 First Lien Credit Agreement, net of debt issuance and discount of $20,223 and $23,818 at December 31, 2015 and 2014, respectively
|
|
$
|
841,078
|
|
|
$
|
846,183
|
|
|
$
|
828,816
|
|
|
$
|
820,798
|
|
2014 Second Lien Credit Agreement, net of debt issuance and discount of $8,159 and $18,184 at December 31, 2015 and 2014, respectively
|
|
$
|
238,341
|
|
|
$
|
471,816
|
|
|
$
|
225,382
|
|
|
$
|
452,943
|
|
|
|
Year Ended December 31,
|
|||||||
|
|
2015
|
|
2014
|
|
2013
|
|||
Patient service revenues:
|
|
|
|
|
|
|
|||
Surgical facilities revenues
|
|
91.6
|
%
|
|
83.9
|
%
|
|
78.9
|
%
|
Ancillary services revenues
|
|
6.4
|
%
|
|
12.3
|
%
|
|
15.5
|
%
|
|
|
98.0
|
%
|
|
96.2
|
%
|
|
94.4
|
%
|
Other service revenues:
|
|
|
|
|
|
|
|||
Optical services revenues
|
|
1.5
|
%
|
|
3.5
|
%
|
|
5.6
|
%
|
Other
|
|
0.5
|
%
|
|
0.3
|
%
|
|
—
|
%
|
|
|
2.0
|
%
|
|
3.8
|
%
|
|
5.6
|
%
|
Total revenues
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
|
2015
|
|
2014
|
|
2013
|
|||||||||||||||
|
|
Amount
|
|
%
|
|
Amount
|
|
%
|
|
Amount
|
|
%
|
|||||||||
Patient service revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Private insurance
|
|
$
|
516,739
|
|
|
55.0
|
%
|
|
$
|
202,172
|
|
|
52.1
|
%
|
|
$
|
162,888
|
|
|
60.6
|
%
|
Government
|
|
359,471
|
|
|
38.2
|
%
|
|
134,041
|
|
|
34.5
|
%
|
|
75,125
|
|
|
28.0
|
%
|
|||
Self-pay
|
|
16,190
|
|
|
1.7
|
%
|
|
13,645
|
|
|
3.5
|
%
|
|
7,587
|
|
|
2.8
|
%
|
|||
Other
|
|
48,311
|
|
|
5.1
|
%
|
|
38,215
|
|
|
9.9
|
%
|
|
23,081
|
|
|
8.6
|
%
|
|||
Total patient service revenues
|
|
$
|
940,711
|
|
|
100.0
|
%
|
|
$
|
388,073
|
|
|
100.0
|
%
|
|
$
|
268,681
|
|
|
100.0
|
%
|
Other service revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Optical service revenues
|
|
$
|
14,572
|
|
|
|
|
|
$
|
14,193
|
|
|
|
|
|
$
|
15,918
|
|
|
|
|
Other revenues
|
|
4,608
|
|
|
|
|
|
1,023
|
|
|
|
|
|
—
|
|
|
|
||||
Total net revenues
|
|
$
|
959,891
|
|
|
|
|
$
|
403,289
|
|
|
|
|
$
|
284,599
|
|
|
|
Balance at December 31, 2012
|
|
$
|
3,234
|
|
Provision for doubtful accounts
|
|
5,885
|
|
|
Accounts written off, net of recoveries
|
|
(4,091
|
)
|
|
Balance at December 31, 2013
|
|
5,028
|
|
|
Provision for doubtful accounts
|
|
9,509
|
|
|
Accounts written off, net of recoveries
|
|
(9,208
|
)
|
|
Balance at December 31, 2014
|
|
5,329
|
|
|
Provision for doubtful accounts
|
|
23,578
|
|
|
Accounts written off, net of recoveries
|
|
(10,585
|
)
|
|
Balance at December 31, 2015
|
|
$
|
18,322
|
|
|
|
December 31,
|
||||||
|
|
2015
|
|
2014
|
||||
|
|
|
|
|
||||
Prepaid expenses
|
|
$
|
7,409
|
|
|
$
|
7,050
|
|
Receivables - optical product purchasing organization
|
|
8,434
|
|
|
7,556
|
|
||
Acquisition escrow receivable
|
|
8,000
|
|
|
—
|
|
||
Other current assets
|
|
10,777
|
|
|
9,399
|
|
||
Total
|
|
$
|
34,620
|
|
|
$
|
24,005
|
|
|
|
December 31,
|
||||||
|
|
2015
|
|
2014
|
||||
|
|
|
|
|
||||
Interest payable
|
|
$
|
5,410
|
|
|
$
|
7,027
|
|
Current taxes payable
|
|
1,977
|
|
|
3,189
|
|
||
Insurance liabilities
|
|
5,476
|
|
|
5,552
|
|
||
Third-party settlements
|
|
5,222
|
|
|
11,708
|
|
||
Acquisition consideration payable
|
|
16,768
|
|
|
—
|
|
||
Amounts due to patients and payors
|
|
11,424
|
|
|
9,476
|
|
||
Other accrued expenses
|
|
22,133
|
|
|
16,918
|
|
||
Total
|
|
$
|
68,410
|
|
|
$
|
53,870
|
|
|
|
December 31,
|
||||||
|
|
2015
|
|
2014
|
||||
|
|
|
|
|
||||
Facility lease obligations
|
|
$
|
53,927
|
|
|
$
|
50,749
|
|
Medical malpractice liability
|
|
6,339
|
|
|
4,253
|
|
||
Liability of SERP
|
|
1,608
|
|
|
1,415
|
|
||
Contingent consideration obligation
|
|
14,049
|
|
|
13,009
|
|
||
Acquisition consideration payable
|
|
—
|
|
|
16,768
|
|
||
Unfavorable lease liability
|
|
1,996
|
|
|
2,427
|
|
||
Other long-term liabilities
|
|
7,694
|
|
|
1,989
|
|
||
Total
|
|
$
|
85,613
|
|
|
$
|
90,610
|
|
Cash consideration
|
$
|
122,470
|
|
Fair value of non-controlling interests
|
13,842
|
|
|
Aggregate fair value of acquisitions
|
136,312
|
|
|
Net assets acquired:
|
|
||
Cash and cash equivalents
|
1,350
|
|
|
Accounts receivable
|
8,448
|
|
|
Other current assets
|
9,650
|
|
|
Property and equipment
|
3,293
|
|
|
Intangible assets
|
7,539
|
|
|
Long-term assets
|
40
|
|
|
Accounts payable and other current assets
|
(5,391
|
)
|
|
Current maturities of long-term debt
|
(226
|
)
|
|
Long-term deferred tax liability
|
(1,836
|
)
|
|
Long-term debt
|
(367
|
)
|
|
Net assets acquired
|
22,500
|
|
|
Excess of fair value over identifiable net assets acquired
|
$
|
113,812
|
|
Cash consideration
|
$
|
298,857
|
|
Acquisition consideration payable
|
16,768
|
|
|
Fair value of non-controlling interests
|
395,663
|
|
|
Fair value of Symbion
|
711,288
|
|
|
Net assets acquired:
|
|
||
Cash
|
40,374
|
|
|
Accounts receivable, net
|
79,830
|
|
|
Inventories
|
18,389
|
|
|
Prepaid expenses and other current assets
|
9,876
|
|
|
Property and equipment
|
153,179
|
|
|
Investments in and advances to affiliates
|
32,728
|
|
|
Intangible assets
|
31,534
|
|
|
Restricted invested assets
|
316
|
|
|
Other long-term assets
|
6,239
|
|
|
Accounts payable
|
(20,419
|
)
|
|
Accrued payroll and benefits
|
(14,600
|
)
|
|
Other current liabilities
|
(47,229
|
)
|
|
Current maturities of long-term debt
|
(83,805
|
)
|
|
Long-term debt, less current maturities
|
(376,395
|
)
|
|
Long-term deferred tax liabilities
|
(19,853
|
)
|
|
Other long-term liabilities
|
(60,500
|
)
|
|
Net assets acquired
|
(250,336
|
)
|
|
Excess of fair value over identifiable net assets acquired
|
$
|
961,624
|
|
|
Year Ended December 31,
|
||||||
|
2014
|
|
2013
|
||||
Net revenues
|
$
|
873,683
|
|
|
$
|
820,186
|
|
|
|
|
|
||||
Net income
|
31,557
|
|
|
42,714
|
|
||
Less: net income attributable to non-controlling interests
|
(68,973
|
)
|
|
(64,396
|
)
|
||
Net loss attributable to Surgery Partners, Inc.
|
$
|
(37,416
|
)
|
|
$
|
(21,682
|
)
|
|
|
December 31,
|
||||||
|
|
2015
|
|
2014
|
||||
|
|
|
|
|
||||
Land
|
|
$
|
6,790
|
|
|
$
|
6,790
|
|
Buildings and improvements
|
|
104,971
|
|
|
100,574
|
|
||
Furniture and equipment
|
|
14,520
|
|
|
13,662
|
|
||
Computer and software
|
|
24,597
|
|
|
20,622
|
|
||
Medical equipment
|
|
96,291
|
|
|
86,132
|
|
||
Construction in progress
|
|
7,619
|
|
|
2,923
|
|
||
Property and equipment, at cost
|
|
254,788
|
|
|
230,703
|
|
||
Less: Accumulated depreciation
|
|
(70,238
|
)
|
|
(55,697
|
)
|
||
Property and equipment, net
|
|
$
|
184,550
|
|
|
$
|
175,006
|
|
Balance at December 31, 2013
|
|
$
|
339,521
|
|
Acquisitions
|
|
959,232
|
|
|
Divestitures
|
|
—
|
|
|
Purchase price adjustments
|
|
—
|
|
|
Balance at December 31, 2014
|
|
$
|
1,298,753
|
|
Acquisitions
|
|
113,812
|
|
|
Divestitures
|
|
(8,399
|
)
|
|
Purchase price adjustments
|
|
3,761
|
|
|
Balance at December 31, 2015
|
|
$
|
1,407,927
|
|
|
|
Physician Income Guarantees
|
|
Management Rights
|
|
Non-Compete Agreements
|
|
Certificates of Need
|
|
Customer Relationships
|
|
Other
|
|
Total Intangible Assets
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Balance at December 31, 2013
|
|
$
|
—
|
|
|
$
|
377
|
|
|
$
|
16,123
|
|
|
$
|
—
|
|
|
$
|
7,665
|
|
|
$
|
2,811
|
|
|
$
|
26,976
|
|
Additions
|
|
1,081
|
|
|
24,700
|
|
|
3,500
|
|
|
3,711
|
|
|
—
|
|
|
242
|
|
|
33,234
|
|
|||||||
Recruitment expense
|
|
(108
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(108
|
)
|
|||||||
Amortization
|
|
—
|
|
|
(320
|
)
|
|
(3,033
|
)
|
|
—
|
|
|
(1,391
|
)
|
|
(470
|
)
|
|
(5,214
|
)
|
|||||||
Balance at December 31, 2014
|
|
$
|
973
|
|
|
$
|
24,757
|
|
|
$
|
16,590
|
|
|
$
|
3,711
|
|
|
$
|
6,274
|
|
|
$
|
2,583
|
|
|
$
|
54,888
|
|
Additions
|
|
1,052
|
|
|
—
|
|
|
7,532
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,584
|
|
|||||||
Recruitment expense
|
|
(813
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(813
|
)
|
|||||||
Amortization
|
|
—
|
|
|
(1,731
|
)
|
|
(5,551
|
)
|
|
—
|
|
|
(1,338
|
)
|
|
(471
|
)
|
|
(9,091
|
)
|
|||||||
Balance at December 31, 2015
|
|
$
|
1,212
|
|
|
$
|
23,026
|
|
|
$
|
18,571
|
|
|
$
|
3,711
|
|
|
$
|
4,936
|
|
|
$
|
2,112
|
|
|
$
|
53,568
|
|
|
|
Amortization of Finite-Lived Intangible Assets
|
||
|
|
|
||
2016
|
|
$
|
9,707
|
|
2017
|
|
8,220
|
|
|
2018
|
|
6,316
|
|
|
2019
|
|
5,764
|
|
|
2020
|
|
2,616
|
|
|
Thereafter
|
|
16,992
|
|
|
Total
|
|
$
|
49,615
|
|
|
|
December 31,
|
||||||
|
|
2015
|
|
2014
|
||||
|
|
|
|
|
||||
2014 Revolver Loan
|
|
$
|
125,250
|
|
|
$
|
—
|
|
2014 First Lien Credit Agreement, dated November 3, 2014, maturing November 3, 2020, net of debt issuance and discount of $20,223 and $23,818 at December 31, 2015 and 2014, respectively
|
|
841,078
|
|
|
846,183
|
|
||
2014 Second Lien Credit Agreement, dated November 3, 2014, maturing November 3, 2021, net of debt issuance and discount of $8,159 and $18,184 at December 31, 2015 and 2014, respectively
|
|
238,341
|
|
|
471,816
|
|
||
Subordinated Notes
|
|
1,000
|
|
|
1,000
|
|
||
Notes payable and secured loans
|
|
40,615
|
|
|
31,600
|
|
||
Capital lease obligations
|
|
11,316
|
|
|
10,755
|
|
||
Total debt
|
|
1,257,600
|
|
|
1,361,354
|
|
||
Less: Current maturities
|
|
27,272
|
|
|
22,088
|
|
||
Total long-term debt
|
|
$
|
1,230,328
|
|
|
$
|
1,339,266
|
|
•
|
$80.0 million
revolving credit facility ( "2014 Revolver Loan")
|
•
|
$870.0 million
1st lien term loan facility ("2014 First Lien Credit Agreement")
|
•
|
$490.0 million
2nd lien term loan facility ("2014 Second Lien Credit Agreement")
|
|
|
Capital Lease Obligations
|
|
Other
Long-Term Debt
|
|
Total
|
||||||
|
|
|
|
|
|
|
||||||
2016
|
|
$
|
4,170
|
|
|
$
|
23,102
|
|
|
$
|
27,272
|
|
2017
|
|
3,162
|
|
|
27,920
|
|
|
31,082
|
|
|||
2018
|
|
2,246
|
|
|
12,433
|
|
|
14,679
|
|
|||
2019
|
|
1,340
|
|
|
136,080
|
|
|
137,420
|
|
|||
2020
|
|
351
|
|
|
827,146
|
|
|
827,497
|
|
|||
Thereafter
|
|
47
|
|
|
247,985
|
|
|
248,032
|
|
|||
Total debt
|
|
$
|
11,316
|
|
|
$
|
1,274,666
|
|
|
$
|
1,285,982
|
|
2016
|
|
$
|
36,443
|
|
2017
|
|
33,019
|
|
|
2018
|
|
29,721
|
|
|
2019
|
|
25,677
|
|
|
2020
|
|
21,401
|
|
|
Thereafter
|
|
110,131
|
|
|
Total minimum operating lease payments
|
|
$
|
256,392
|
|
2016
|
|
$
|
1,043
|
|
2017
|
|
1,101
|
|
|
2018
|
|
1,137
|
|
|
2019
|
|
658
|
|
|
2020
|
|
468
|
|
|
Thereafter
|
|
2,231
|
|
|
Total non-cancellable sub-lease income
|
|
$
|
6,638
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2015
|
|
2014
|
|
2013
|
||||||
|
|
|
|
|
|
|
||||||
Numerator:
|
|
|
|
|
|
|
||||||
Net income (loss) attributable to Surgery Partners, Inc.
|
|
$
|
1,429
|
|
|
$
|
(65,897
|
)
|
|
$
|
(9,062
|
)
|
|
|
|
|
|
|
|
||||||
Denominator:
|
|
|
|
|
|
|
||||||
Weighted average shares outstanding- basic
(1)
|
|
36,066,233
|
|
|
32,295,364
|
|
|
31,815,520
|
|
|||
Effect of dilutive securities
(2)
|
|
1,398,154
|
|
|
—
|
|
|
—
|
|
|||
Weighted average shares outstanding- diluted
|
|
37,464,387
|
|
|
32,295,364
|
|
|
31,815,520
|
|
|||
|
|
|
|
|
|
|
||||||
Earnings (loss) per share:
|
|
|
|
|
|
|
||||||
Basic earnings (loss) per share
|
|
$
|
0.04
|
|
|
$
|
(2.04
|
)
|
|
$
|
(0.28
|
)
|
Diluted earnings (loss) per share
(2)
|
|
$
|
0.04
|
|
|
$
|
(2.04
|
)
|
|
$
|
(0.28
|
)
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2015
|
|
2014
|
|
2013
|
||||||
|
|
|
|
|
|
|
||||||
Current:
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
State
|
|
909
|
|
|
1,669
|
|
|
469
|
|
|||
Deferred:
|
|
|
|
|
|
|
||||||
Federal
|
|
(132,311
|
)
|
|
13,235
|
|
|
6,353
|
|
|||
State
|
|
(17,580
|
)
|
|
854
|
|
|
748
|
|
|||
Total income tax (benefit) expense
|
|
$
|
(148,982
|
)
|
|
$
|
15,758
|
|
|
$
|
7,570
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2015
|
|
2014
|
|
2013
|
||||||
|
|
|
|
|
|
|
||||||
Tax (benefit) expense at U.S.federal statutory rate
|
|
$
|
(26,648
|
)
|
|
$
|
(3,840
|
)
|
|
$
|
8,601
|
|
State income tax, net of U.S. federal tax benefit
|
|
1,059
|
|
|
1,402
|
|
|
408
|
|
|||
Change in valuation allowance
|
|
(137,721
|
)
|
|
29,336
|
|
|
4,067
|
|
|||
Expiration of carryforwards and stock option forfeitures
|
|
—
|
|
|
1,286
|
|
|
2,524
|
|
|||
Net income attributable to non-controlling interests
|
|
(24,996
|
)
|
|
(13,207
|
)
|
|
(9,108
|
)
|
|||
Changes in measurement of uncertain tax positions
|
|
(10
|
)
|
|
589
|
|
|
—
|
|
|||
Nondeductible transaction costs
|
|
3,442
|
|
|
4,230
|
|
|
—
|
|
|||
Tax return reconciling differences
|
|
(1,574
|
)
|
|
(4,419
|
)
|
|
836
|
|
|||
Change in effective tax rate
|
|
(2,143
|
)
|
|
|
|
|
|||||
TRA liability
|
|
39,428
|
|
|
|
|
|
|||||
Other
|
|
181
|
|
|
381
|
|
|
242
|
|
|||
Total income tax (benefit) expense
|
|
$
|
(148,982
|
)
|
|
$
|
15,758
|
|
|
$
|
7,570
|
|
|
|
December 31,
|
||||||
|
|
2015
|
|
2014
|
||||
|
|
|
|
|
||||
Deferred tax assets:
|
|
|
|
|
||||
Medical malpractice liability
|
|
$
|
869
|
|
|
$
|
526
|
|
Accrued vacation and incentive compensation
|
|
2,212
|
|
|
2,079
|
|
||
Net operating loss carryforwards
|
|
146,663
|
|
|
123,709
|
|
||
Allowance for bad debts
|
|
1,846
|
|
|
980
|
|
||
Basis differences of partnerships and joint ventures
|
|
—
|
|
|
16,131
|
|
||
SERP liability
|
|
685
|
|
|
527
|
|
||
Capital loss carryforwards
|
|
2,052
|
|
|
3,513
|
|
||
Stock option compensation
|
|
367
|
|
|
362
|
|
||
Deferred rent
|
|
2,288
|
|
|
—
|
|
||
Deferred financing costs
|
|
3,083
|
|
|
4,386
|
|
||
Audit and tax fee accruals
|
|
242
|
|
|
760
|
|
||
FIN 48 liabilities
|
|
244
|
|
|
440
|
|
||
TRA liability
|
|
2,750
|
|
|
—
|
|
||
Other deferred assets
|
|
1,748
|
|
|
1,597
|
|
||
Total gross deferred tax assets
|
|
165,049
|
|
|
155,010
|
|
||
Less: Valuation allowance
|
|
(6,949
|
)
|
|
(142,909
|
)
|
||
Total deferred tax assets
|
|
158,100
|
|
|
12,101
|
|
||
Deferred tax liabilities:
|
|
|
|
|
||||
Depreciation on property and equipment
|
|
(806
|
)
|
|
(1,050
|
)
|
||
Amortization of intangible assets
|
|
(16,083
|
)
|
|
(16,159
|
)
|
||
Basis differences of partnerships and joint ventures
|
|
(46,494
|
)
|
|
(43,195
|
)
|
||
Deferred rent
|
|
—
|
|
|
(515
|
)
|
||
Other deferred liabilities
|
|
(612
|
)
|
|
(466
|
)
|
||
Total deferred tax liabilities
|
|
(63,995
|
)
|
|
(61,385
|
)
|
||
Net deferred tax assets (liabilities)
|
|
$
|
94,105
|
|
|
$
|
(49,284
|
)
|
|
|
Year Ended December 31,
|
||||||
|
|
2015
|
|
2014
|
||||
|
|
|
|
|
||||
Unrecognized tax benefits at beginning of year
|
|
$
|
2,755
|
|
|
$
|
—
|
|
Additions for tax positions acquired from Symbion
|
|
—
|
|
|
1,766
|
|
||
Additions based on tax provisions related to the current year
|
|
—
|
|
|
66
|
|
||
Additions for tax positions of prior years
|
|
136
|
|
|
923
|
|
||
Reductions for tax positions of prior year
|
|
(996
|
)
|
|
|
|||
Settlements
|
|
(492
|
)
|
|
|
|||
Unrecognized tax benefits at end of year
|
|
$
|
1,403
|
|
|
$
|
2,755
|
|
Expected volatility
|
|
29% - 38%
|
|
|
Risk-free interest rate
|
|
0.90% - 1.36%
|
|
|
Expected dividends
|
|
—
|
|
|
Average expected term (years)
|
|
3.00
|
|
|
Fair value of stock options granted
|
|
$
|
4.83
|
|
|
|
Units
|
|
Weighted Average Exercise Price
|
|
Weighted Average Remaining Contractual Term (years)
|
|||
Outstanding at December 31, 2014
|
|
—
|
|
|
|
|
|
||
Granted
|
|
8,488
|
|
|
$
|
20.03
|
|
|
3.0
|
Exercised
|
|
—
|
|
|
|
|
|
||
Forfeited
|
|
—
|
|
|
|
|
|
||
Outstanding at December 31, 2015
(1)
|
|
8,488
|
|
|
$
|
20.03
|
|
|
3.0
|
|
|
Total Shares
|
|
Vested Shares
|
|
Unvested Shares
|
|
Weighted-Average Grant Fair Value
|
|||||
|
|
|
|
|
|
|
|
|
|||||
Outstanding at January 1, 2013
|
|
3,234,664
|
|
|
1,245,510
|
|
|
1,989,154
|
|
|
|
$0.81
|
|
Granted
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Forfeited/Terminated
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Purchased
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Vested
|
|
—
|
|
|
543,270
|
|
|
(543,270
|
)
|
|
0.83
|
|
|
Outstanding at December 31, 2013
|
|
3,234,664
|
|
|
1,788,780
|
|
|
1,445,884
|
|
|
|
$0.81
|
|
Granted
|
|
583,404
|
|
|
—
|
|
|
583,404
|
|
|
6.44
|
|
|
Forfeited/Terminated
|
|
(127,582
|
)
|
|
—
|
|
|
(127,582
|
)
|
|
1.27
|
|
|
Purchased
|
|
(803,336
|
)
|
|
(803,336
|
)
|
|
—
|
|
|
3.64
|
|
|
Vested
|
|
—
|
|
|
659,641
|
|
|
(659,641
|
)
|
|
1.43
|
|
|
Outstanding at December 31, 2014
|
|
2,887,150
|
|
|
1,645,085
|
|
|
1,242,065
|
|
|
|
$1.96
|
|
Granted
|
|
569,114
|
|
|
—
|
|
|
569,114
|
|
|
6.31
|
|
|
Forfeited/Terminated
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Purchased
|
|
(11,742
|
)
|
|
(11,742
|
)
|
|
—
|
|
|
6.31
|
|
|
Vested
|
|
—
|
|
|
1,643,525
|
|
|
(1,643,525
|
)
|
|
3.79
|
|
|
Outstanding at December 31, 2015
|
|
3,444,522
|
|
|
3,276,868
|
|
|
167,654
|
|
|
|
$2.53
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2015
|
|
2014
|
|
2013
|
||||||
Net Revenues:
|
|
|
|
|
|
|
||||||
Surgical facility services
|
|
$
|
884,144
|
|
|
$
|
339,309
|
|
|
$
|
224,578
|
|
Ancillary services
|
|
61,175
|
|
|
49,787
|
|
|
44,103
|
|
|||
Optical services
|
|
14,572
|
|
|
14,193
|
|
|
15,918
|
|
|||
Total revenues
|
|
$
|
959,891
|
|
|
$
|
403,289
|
|
|
$
|
284,599
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2015
|
|
2014
|
|
2013
|
||||||
Segment Operating Income:
|
|
|
|
|
|
|
||||||
Surgical facility services
|
|
$
|
224,098
|
|
|
$
|
112,237
|
|
|
$
|
77,905
|
|
Ancillary services
|
|
15,666
|
|
|
16,389
|
|
|
16,909
|
|
|||
Optical services
|
|
2,283
|
|
|
2,238
|
|
|
3,032
|
|
|||
Total
|
|
$
|
242,047
|
|
|
$
|
130,864
|
|
|
$
|
97,846
|
|
|
|
|
|
|
|
|
||||||
General and administrative
|
|
$
|
(59,534
|
)
|
|
$
|
(33,149
|
)
|
|
$
|
(27,275
|
)
|
Gain (loss) on disposal or impairment of long-lived assets, net
|
|
2,097
|
|
|
(1,804
|
)
|
|
(2,482
|
)
|
|||
Loss on debt extinguishment
|
|
(16,102
|
)
|
|
(23,414
|
)
|
|
(9,863
|
)
|
|||
Merger transaction and integration costs
|
|
(17,920
|
)
|
|
(21,690
|
)
|
|
—
|
|
|||
Termination of management agreement and IPO costs
|
|
(5,834
|
)
|
|
—
|
|
|
$
|
—
|
|
||
Total operating income
|
|
$
|
144,754
|
|
|
$
|
50,807
|
|
|
$
|
58,226
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2015
|
|
2014
|
|
2013
|
||||||
Supplemental Information:
|
|
|
|
|
|
|
||||||
Depreciation and amortization:
|
|
|
|
|
|
|
||||||
Surgical facility services
|
|
$
|
27,447
|
|
|
$
|
9,911
|
|
|
$
|
7,405
|
|
Ancillary services
|
|
1,934
|
|
|
1,812
|
|
|
1,460
|
|
|||
Optical services
|
|
1,622
|
|
|
1,641
|
|
|
1,862
|
|
|||
Total
|
|
$
|
31,003
|
|
|
$
|
13,364
|
|
|
$
|
10,727
|
|
|
|
|
|
|
|
|
||||||
General and administrative
|
|
$
|
3,542
|
|
|
$
|
1,697
|
|
|
$
|
936
|
|
Total depreciation and amortization
|
|
$
|
34,545
|
|
|
$
|
15,061
|
|
|
$
|
11,663
|
|
|
|
December 31,
|
||||||
|
|
2015
|
|
2014
|
||||
Assets:
|
|
|
|
|
||||
Surgical facility services
|
|
$
|
1,762,396
|
|
|
$
|
1,638,874
|
|
Ancillary services
|
|
118,198
|
|
|
70,370
|
|
||
Optical services
|
|
25,537
|
|
|
25,876
|
|
||
Total
|
|
1,906,131
|
|
|
1,735,120
|
|
||
|
|
|
|
|
||||
General and administrative
|
|
$
|
200,553
|
|
|
$
|
123,674
|
|
Total assets
|
|
$
|
2,106,684
|
|
|
$
|
1,858,794
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2015
|
|
2014
|
|
2013
|
||||||
Supplemental Information:
|
|
|
|
|
|
|
||||||
Cash purchases of property and equipment, net:
|
|
|
|
|
|
|
||||||
Surgical facility services
|
|
$
|
26,723
|
|
|
$
|
5,158
|
|
|
$
|
2,301
|
|
Ancillary services
|
|
1,051
|
|
|
1,034
|
|
|
562
|
|
|||
Optical services
|
|
128
|
|
|
335
|
|
|
161
|
|
|||
Total
|
|
$
|
27,902
|
|
|
$
|
6,527
|
|
|
$
|
3,024
|
|
|
|
|
|
|
|
|
||||||
General and administrative
|
|
$
|
5,537
|
|
|
$
|
1,209
|
|
|
$
|
1,126
|
|
Total cash purchases of property and equipment, net
|
|
$
|
33,439
|
|
|
$
|
7,736
|
|
|
$
|
4,150
|
|
|
Fiscal Quarter
|
||||||||||
|
1Q15
|
|
2Q15
|
|
3Q15
|
|
4Q15
|
||||
Revenues
|
224,143
|
|
|
232,827
|
|
|
239,599
|
|
|
263,322
|
|
Cost of revenues
|
155,773
|
|
|
161,558
|
|
|
168,821
|
|
|
183,174
|
|
Net income
|
10,488
|
|
|
12,479
|
|
|
13,784
|
|
|
36,094
|
|
Net income attributable to non-controlling interests
|
(17,250
|
)
|
|
(17,905
|
)
|
|
(16,906
|
)
|
|
(19,355
|
)
|
Net income (loss) attributable to Surgery Partners, Inc.
|
(6,762
|
)
|
|
(5,426
|
)
|
|
(3,122
|
)
|
|
16,739
|
|
Basic net loss per share of common stock
|
(0.21
|
)
|
|
(0.17
|
)
|
|
(0.10
|
)
|
|
0.35
|
|
Diluted net loss per share common stock
|
(0.21
|
)
|
|
(0.17
|
)
|
|
(0.10
|
)
|
|
0.35
|
|
|
Fiscal Quarter
|
||||||||||
|
1Q14
|
|
2Q14
|
|
3Q14
|
|
4Q14
|
||||
Revenues
|
70,480
|
|
|
76,815
|
|
|
76,303
|
|
|
179,691
|
|
Cost of revenues
|
43,050
|
|
|
45,164
|
|
|
45,377
|
|
|
120,587
|
|
Net income (loss)
|
2,258
|
|
|
7,025
|
|
|
430
|
|
|
(36,765
|
)
|
Net income attributable to non-controlling interests
|
(6,377
|
)
|
|
(7,631
|
)
|
|
(7,338
|
)
|
|
(17,499
|
)
|
Net income (loss) attributable to Surgery Partners, Inc.
|
(4,119
|
)
|
|
(606
|
)
|
|
(6,908
|
)
|
|
(54,264
|
)
|
Basic net loss per share of common stock
|
(0.13
|
)
|
|
(0.02
|
)
|
|
(0.22
|
)
|
|
(1.69
|
)
|
Diluted net loss per share common stock
|
(0.13
|
)
|
|
(0.02
|
)
|
|
(0.22
|
)
|
|
(1.69
|
)
|
SURGERY PARTNERS, INC.
|
|
|
|
By:
|
/s/ Michael T. Doyle
Michael T. Doyle
Chief Executive Officer
(Principal Executive Officer)
|
SIGNATURES
|
TITLE
|
DATE
|
|
Chief Executive Officer, Director
(Principal Executive Officer)
|
March 11, 2016
|
/s/ Michael T. Doyle
|
||
Michael T. Doyle
|
|
|
|
Executive Vice President, Chief Financial Officer
(Principal Financial and Accounting Officer) |
March 11, 2016
|
/s/ Teresa F. Sparks
|
||
Teresa F. Sparks
|
|
|
|
Chairman
|
March 11, 2016
|
/s/ Christopher Laitala
|
||
Christopher Laitala
|
|
|
|
Director
|
March 11, 2016
|
/s/ Adam Feinstein
|
||
Adam Feinstein
|
|
|
|
Director
|
March 11, 2016
|
/s/ Matthew I. Lozow
|
||
Matthew I. Lozow
|
|
|
|
Director
|
March 11, 2016
|
/s/ Brent Turner
|
||
Brent Turner
|
|
|
No.
|
|
Description
|
|
|
|
3.1
|
|
Amended and Restated Certificate of Incorporation (incorporated herein by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q filed November 13, 2015).
|
3.2
|
|
Amended and Restated By-Laws (incorporated herein by reference to Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q filed November 13, 2015).
|
10.1
|
|
Tax Receivable Agreement, dated as of September 30, 2015, among Surgery Partners, Inc., H.I.G. Surgery Centers, LLC and certain other Stockholders party thereto (incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed November 13, 2015).
|
10.2
|
|
Registration Rights Agreement, dated as of September 30, 2015, among Surgery Partners, Inc. and certain other Stockholders party thereto (incorporated herein by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q filed November 13, 2015).
|
10.3
|
|
Reorganization Agreement, dated as of September 30, 2015, among Surgery Partners, Inc., Surgery Center Holdings, LLC, H.I.G. Surgery Centers, LLC and certain other Members party thereto (incorporated herein by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q filed November 13, 2015).
|
10.4
|
|
Form of Indemnification Agreement (incorporated herein by reference to Exhibit 10.14 to the Company's Registration Statement on Form S-1, Amended, filed September 14, 2015).
|
10.5
|
|
First Lien Credit Agreement, dated as of November 3, 2014, among SP Holdco I, Inc., Surgery Center Holdings, Inc., Jefferies Finance LLC and the other guarantors and lenders party thereto (incorporated herein by reference to Exhibit 10.5 to the Company's Registration Statement on Form S-1 filed August 17, 2015).
|
10.6
|
|
First Lien Incremental Amendment to First Lien Credit Agreement, dated as of October 7, 2015, among SP Holdco I, Inc., Surgery Center Holdings, Inc., Jefferies Finance LLC and the other guarantors and lenders party thereto (incorporated herein by reference as Exhibit 10.1 to Surgery Partners, Inc.’s Current Report on Form 8-K filed October 9, 2015)
|
10.7
|
|
Second Lien Credit Agreement, dated as of November 3, 2014, among SP Holdco I, Inc., Surgery Center Holdings, Inc., Jefferies Finance LLC and the other guarantors and lenders party thereto (incorporated herein by reference to Exhibit 10.6 to the Company's Registration Statement on Form S-1 filed August 17, 2015).
|
10.8
|
|
Management and Investment Advisory Services Agreement, dated as of December 24, 2009, by and among Bayside Capital, Inc., Surgery Center Holdings, Inc. and certain of its subsidiaries (incorporated herein by reference to Exhibit 10.2 to the Company's Registration Statement on Form S-1 filed August 17, 2015).
|
10.9
|
|
First Amendment to Management and Investment Advisory Services Agreement, dated as of May 4, 2011, by and among Bayside Capital, Inc., Surgery Center Holdings, Inc. and certain of its subsidiaries (incorporated herein by reference to Exhibit 10.3 to the Company's Registration Statement on Form S-1 filed August 17, 2015).
|
10.10
|
|
Second Amendment to Management and Investment Advisory Services Agreement, dated as of November 3, 2014, by and among Bayside Capital, Inc., Surgery Center Holdings, Inc. and certain of its subsidiaries (incorporated herein by reference to Exhibit 10.4 to the Company's Registration Statement on Form S-1 filed August 17, 2015).
|
10.11
|
|
Assignment and Acceptance Agreement, among H.I.G. Surgery Centers, LLC and THL Credit, Inc., for assignment effective April 11, 2013 (incorporated herein by reference to Exhibit 10.7 to the Company's Registration Statement on Form S-1 filed August 17, 2015).
|
10.12
(a)
|
|
Employment Agreement of Michael Doyle, as amended (incorporated herein by reference to Exhibit 10.10 to the Company's Registration Statement on Form S-1, Amended, filed September 21, 2015).
|
10.13
(a)
|
|
Employment Agreement of Teresa Sparks, as amended (incorporated herein by reference to Exhibit 10.11 to the Company's Registration Statement on Form S-1, Amended, filed September 21, 2015).
|
10.14
(a)
|
|
Employment Agreement of John Crysel, as amended (incorporated herein by reference to Exhibit 10.12 to the Company's Registration Statement on Form S-1, Amended, filed September 21, 2015).
|
10.15
(a)
|
|
2015 Omnibus Incentive Plan (incorporated herein by reference as Exhibit 4.3 to the Company's Registration Statement on Form S-8 filed October 6, 2015).
|
10.16
(a)
|
|
Form of Reorganization Restricted Stock Award under the 2015 Omnibus Incentive Plan (incorporated herein by reference to Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q filed November 13, 2015).
|
10.17
(a)
|
|
Form of Director Option Award under the 2015 Omnibus Incentive Plan (incorporated herein by reference to Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q filed November 13, 2015).
|
10.18
(a)
|
|
Form of Restricted Stock Agreement under the 2015 Omnibus Incentive Plan (incorporated herein by reference to Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q filed November 13, 2015).
|
10.19
(a)
|
|
Cash Incentive Plan (incorporated herein by reference to Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q filed November 13, 2015).
|
10.20
(a)
|
|
Symbion, Inc. Supplemental Executive Retirement Plan, Effective May 1, 2005 (incorporated herein by reference to Exhibit 10.17 to the Company's Registration Statement on Form S-1, Amended, filed September 21, 2015).
|
10.21
|
|
Office Lease Agreement dated November 17, 2015 between Highwoods Realty Limited Partnership and Surgery Partners, Inc.
|
21.1
|
|
List of Subsidiaries of the Registrant
|
23.1
|
|
Consent of Independent Registered Public Accounting Firm- Ernst & Young, LLP
|
23.2
|
|
Consent of Independent Registered Public Accounting Firm- BDO USA, LLP
|
31.1
|
|
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2
|
|
Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1
|
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2
|
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS
|
|
XBRL Instance Document
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
1.
|
BASIC DEFINITIONS AND PROVISIONS.
The following basic definitions and provisions apply to this Lease:
|
I.
|
ADDITIONAL RENT - OPERATING EXPENSES (EXPENSE STOP)
|
7.
|
Payment of Additional Rent.
For each calendar year (or partial calendar year) during the Term, Tenant shall pay to Landlord, as
|
II.
|
RENEWAL OPTIONS
|
1.
|
Option to Extend.
Tenant shall have the right and option to renew the Lease ("Renewal Option") for two additional periods of five
|
1.
|
Access to Building
. On Saturdays, Sundays, legal holidays and weekdays between the hours of 6:00 P.M. and 8:00 A.M., access to the Building and/or to the halls, corridors, elevators or stairways in the Building may be restricted and access shall be gained by use of a key or electronic card to the outside doors of the Buildings. Landlord may from time to time establish security controls for the purpose of regulating access to the Building. Tenant shall be responsible for providing access to the Premises for its agents, employees, invitees and guests at times access is restricted, and shall comply with all such security regulations so established.
|
2.
|
Protecting Premises.
The last member of Tenant to leave the Premises shall close and securely lock all doors or other means of entry to the Premises and shut off all utilities in the Premises.
|
3.
|
Building Directories.
The directories for the Building in the form selected by Landlord shall be used exclusively for the display of the name and location of tenants. Any additional names and/or name change requested by Tenant to be displayed in the directories must be approved by Landlord and, if approved, will be provided at the sole expense of Tenant.
|
4.
|
Large Articles.
Furniture, freight and other large or heavy articles may be brought into the Building only at times and in the manner designated by Landlord and always at Tenant's sole responsibility. All damage done to the Building, its furnishings, fixtures or equipment by moving or maintaining such furniture, freight or articles shall be repaired at Tenant’s expense.
|
5.
|
Signs.
Tenant shall not paint, display, inscribe, maintain or affix any sign, placard, picture, advertisement, name, notice, lettering or direction on any part of the outside or inside of the Building, or on any part of the inside of the Premises which can be seen from the outside of the Premises, without the written consent of Landlord, and then only such name or names or matter and in such color, size, style, character and material as shall be first approved by Landlord in writing. Landlord, without notice to Tenant, reserves the right to remove, at Tenant's expense, all matter other than that provided for above.
|
6.
|
Compliance with Laws.
Tenant shall comply with all applicable laws, ordinances, governmental orders or regulations and applicable orders or directions from any public office or body having jurisdiction, whether now existing or hereinafter enacted with respect to the Premises and the use or occupancy thereof. Tenant shall not make or permit any use of the Premises which directly or indirectly is forbidden by law, ordinance, governmental regulations or order or direction of applicable public authority, which may be dangerous to persons or property or which may constitute a nuisance to other tenants.
|
7.
|
Hazardous Materials.
Tenant shall not use or permit to be brought into the Premises or the Building any flammable oils or fluids, or any explosive or other articles deemed hazardous to persons or property, or do or permit to be done any act or thing which will invalidate, or which, if brought in, would be in conflict with any insurance policy covering the Building or its operation, or the Premises, or any part of either, and will not do or permit to be done anything in or upon the Premises, or bring or keep anything therein, which shall not comply with all rules, orders, regulations or requirements of any organization, bureau, department or body having jurisdiction with respect thereto (and Tenant shall at all times comply with all such rules, orders, regulations or requirements), or which shall increase the rate of insurance on the Building, its appurtenances, contents or operation.
|
8.
|
Defacing Premises and Overloading.
Tenant shall not place anything or allow anything to be placed in the Premises near the glass of any door, partition, wall, window or window sill that may be unsightly from outside the Premises. Tenant shall not place or permit to be placed any article of any kind on any window ledge or on the exterior walls; blinds, shades, awnings or other forms of inside or outside window ventilators or similar devices shall not be placed in or about the outside windows in the Premises except to the extent that the character, shape, color, material and make thereof is approved by Landlord. Tenant shall not do any painting or decorating in the Premises or install any floor coverings in the Premises or make, paint, cut or drill into, or in any way deface any part of the Premises or Building without in each instance obtaining the prior written consent of Landlord. Tenant shall not overload any floor or part thereof in the Premises, or any facility in the Building or any public corridors or elevators therein by bringing in or removing any large or heavy articles and Landlord may direct and control the location of safes, files, and all other heavy articles and, if considered necessary by Landlord may require Tenant at its expense to supply whatever supplementary supports necessary to properly distribute the weight.
|
9.
|
Obstruction of Public Areas.
Tenant shall not, whether temporarily, accidentally or otherwise, allow anything to remain in, place or store anything in, or obstruct in any way, any sidewalk, court, hall, passageway, entrance, or shipping area. Tenant shall lend its full cooperation to keep such areas free from all obstruction and in a clean and sightly condition, and move all supplies, furniture and equipment as soon as received directly to the Premises, and shall move all such items and waste (other than waste customarily removed by Building employees) that are at any time being taken from the Premises directly to the areas designated for disposal. All courts, passageways, entrances, exits, elevators, escalators, stairways, corridors, halls and roofs are not for the use of the general public and Landlord shall in all cases retain the right to control and prevent access thereto by all persons whose presence, in the judgment of Landlord, shall be prejudicial to the safety, character, reputation and interest of the Building and its tenants; provided, however, that nothing herein contained shall be construed to prevent such access to persons with whom Tenant deals within the normal course of Tenant's business so long as such persons are not engaged in illegal activities.
|
10.
|
Additional Locks.
Tenant shall not attach, or permit to be attached, additional locks or similar devices to any door or window, change existing locks or the mechanism thereof, or make or permit to be made any keys for any door other than those provided by Landlord. Upon termination of this Lease or of Tenant's possession, Tenant shall immediately surrender all keys to the Premises.
|
11.
|
Communications or Utility Connections.
If Tenant desires signal, alarm or other utility or similar service connections installed or changed, then Tenant shall not install or change the same without the approval of Landlord, and then only under direction of Landlord and at Tenant's expense. Tenant shall not install in the Premises any equipment which requires a greater than normal amount of electrical current for the permitted use without the advance written consent of Landlord. Tenant shall ascertain from Landlord the maximum amount of load or demand for or use of electrical current which can safely be permitted in the Premises, taking into account the capacity of the electric wiring in the Building and the Premises and the needs of other tenants in the Building, and shall not in any event connect a greater load than that which is safe.
|
12.
|
Office of the Building.
Service requirements of Tenant will be attended to only upon application at the office of Highwoods Properties, Inc. Employees of Landlord shall not perform, and Tenant shall not engage them to do any work outside of their duties unless specifically authorized by Landlord.
|
13.
|
Restrooms.
The restrooms, toilets, urinals, vanities and the other apparatus shall not be used for any purpose other than that for which they were constructed, and no foreign substance of any kind whatsoever shall be thrown therein. The expense of any breakage, stoppage or damage resulting from the violation of this rule shall be borne by the Tenant whom, or whose employees or invitees, shall have caused it.
|
14.
|
Intoxication.
Landlord reserves the right to exclude or expel from the Building any person who, in the judgment of Landlord, is intoxicated, or under the influence of liquor or drugs, or who in any way violates any of the Rules and Regulations of the Building.
|
15.
|
Nuisances and Certain Other Prohibited Uses.
Tenant shall not (a) install or operate any internal combustion engine, boiler, machinery, refrigerating, heating or air conditioning apparatus in or about the Premises; (b) engage in any mechanical business, or in any service in or about the Premises or Building, except those ordinarily embraced within the Permitted Use as specified in the Lease; (c) use the Premises for housing, lodging, or sleeping purposes; (d) prepare or warm food in the Premises or permit food to be brought into the Premises for consumption therein (heating coffee and individual lunches of employees excepted) except by express permission of Landlord; (e) place any radio or television antennae on the roof or on or in any part of the inside or outside of the Building other than the inside of the Premises, or place a musical or sound producing instrument or device inside or outside the Premises which may be heard outside the Premises; (f) use any power source for the operation of any equipment or device other than dry cell batteries or electricity; (g) operate any electrical device from which may emanate waves that could interfere with or impair radio or television broadcasting or reception from or in the Building or elsewhere; (h) bring or permit to be in the Building any bicycle, other vehicle, dog (except in the company of a blind person), other animal or bird; (i) make or permit any objectionable noise or odor to emanate from the Premises; (j) disturb, harass, solicit or canvass any occupant of the Building; (k) do anything in or about the Premises which could be a nuisance or tend to injure the reputation of the Building; (i) allow any firearms in the Building or the Premises except as approved by Landlord in writing.
|
16.
|
Solicitation.
Tenant shall not canvass other tenants in the Building to solicit business or contributions and shall not exhibit, sell or offer to sell, use, rent or exchange any products or services in or from the Premises unless ordinarily embraced within the Tenant's Permitted Use as specified in the Lease.
|
17.
|
Energy Conservation.
Tenant shall not waste electricity, water, heat or air conditioning and agrees to cooperate fully with Landlord to insure the most effective operation of the Building's heating and air conditioning, and shall not allow the adjustment (except by Landlord's authorized Building personnel) of any controls. No space heaters are allowed in any Leased Premises.
|
18.
|
Building Security.
At all times other than normal business hours the exterior Building doors and suite entry door(s) must be kept locked to assist in security. The janitorial service, upon completion of its duties, will lock all Building doors. Problems in Building and suite security should be directed to Landlord at (615) 320-5566.
|
19.
|
Parking.
Parking is in designated parking areas only. There may be no vehicles in "no parking" zones or at curbs. Handicapped spaces are for handicapped persons and the Police Department will ticket unauthorized (unidentified) cars in handicapped spaces. Landlord reserves the right to remove vehicles that do not comply with the Lease or these Rules and Regulations and Tenant shall indemnify and hold harmless Landlord from its reasonable exercise of these rights with respect to the vehicles of Tenant and its employees, agents and invitees.
|
20.
|
Janitorial Service.
The janitorial staff will remove all trash from trash cans. Any container or boxes left in hallways or apparently discarded, unless clearly and conspicuously labeled DO NOT REMOVE, may be removed without liability to the janitorial company or Landlord. Any large volume of trash resulting from delivery of furniture, equipment, etc., should be removed by the delivery company, Tenant, or Landlord at Tenant's expense. Janitorial service will be provided after hours five days a week. All requests for trash removal other than normal janitorial services should be directed to Landlord at (615) 320-5566.
|
21.
|
Construction.
Tenant shall make no structural or interior alterations of the Premises. All structural and nonstructural alterations and modifications to the Premises shall be coordinated through Landlord as outlined in the Lease. Completed construction drawings of the requested changes are to be submitted to Landlord or its designated agent for pricing and construction supervision.
|
22.
|
No Smoking.
Smoking of any kind or type, including without limitation, cigarettes, cigars, pipes, other tobacco products, or illegal substances is prohibited in the Building, including, but not limited to, tenant spaces, Common Areas such as restrooms, elevators, stairwells, hallways, lobbies, public, health or fitness centers, mail rooms, vending rooms, loading docks, mechanical and electrical rooms, roofs, and/or other areas specifically posted by Landlord. Landlord may from time to time designate certain “Smoking Areas” outside the Building,
|
23.
|
Plumbing Connections
. If Tenant desires to install any single piece of equipment or appliance in the Premises which requires a connection of any kind to the Building’s plumbing system, then Tenant shall not connect the same without obtaining the prior written approval of Landlord, and then only under direction of Landlord and at Tenant’s expense. Furthermore, any such connection to the Building plumbing system made by Tenant within the Premises shall only be done by utilizing fittings, valves, and/or connectors made out of copper tubing with brass fittings or braided steel tubing with metal fittings. No connection may be made by using plastic material. Any work associated with making any such connection must be performed by a licensed plumber.
|
24.
|
Water Heaters.
Tenant, at Tenant’s expense, shall institute an appropriate water heater installation and maintenance plan for any and all water heaters serving the Premises. Tenant’s water heater installation and maintenance plan shall include the following:
|
•
|
Tenant shall not install any water heaters in the Building without first obtaining Landlord’s prior written consent.
|
•
|
Tenant shall, at Tenant’s expense, cause any water heater serving the Premises to be installed in accordance with all applicable laws, including, but not limited to, applicable building code. All such installation shall be permitted by the local jurisdiction having authority when required.
|
•
|
Tenant shall, at Tenant’s expense, ensure that all water heater installations have the necessary temperature and pressure relief valve connection, a drip pan, and an appropriate drain line.
|
•
|
Tenant shall, at Tenant’s expense, conduct periodic visual inspections of water heaters serving the Premises and any associated pressure tanks (twice annually, at a minimum) to check for any signs of leakage, corrosion, rust, or line kinks.
|
•
|
Tenant shall, at Tenant’s expense, replace/repair water heaters and/or pressure tanks serving the Premises that reveal signs of leakage, corrosion, rust, or line kinks.
|
•
|
Tenant shall not use any water heater serving the Premises that is more than 10 years old. Tenant shall, at Tenant’s expense, replace each and every water heater and associated pressure tank serving the Premises once they reach 10 years of service.
|
Tenant:
|
|
||||||||||||
Landlord:
|
|
||||||||||||
Date Lease Signed:
|
|
|
|
|
|
||||||||
Term of Lease:
|
|
months.
|
|||||||||||
|
|
|
|||||||||||
|
|||||||||||||
Address of Leased Premises
|
|||||||||||||
Suite
:
|
|
Containing approximately
|
|
square feet, located
|
|||||||||
at
|
________
|
||||||||||||
|
________
|
||||||||||||
|
|||||||||||||
Commencement Date:
|
|
||||||||||||
Expiration Date:
|
|
||||||||||||
|
|||||||||||||
The above described Premises are accepted by Tenant as suitable for the purpose for which they were let. The
|
|||||||||||||
above described lease term commences and expires on the dates set forth above. Tenant acknowledges that on
|
|||||||||||||
|
it received from Landlord
|
|
keys to the Premises. It is understood that if there is a
|
||||||||||
punch list which will be completed after move-in, then said punch list will be an exhibit hereto.
|
|||||||||||||
|
|||||||||||||
TENANT
|
|
LANDLORD
|
|||||||||||
|
|
|
|||||||||||
(Type/Print Name of Tenant)
|
|
(Type/Print Name of Landlord)
|
|||||||||||
|
|
|
|||||||||||
(Signature)
|
|
(Signature)
|
|||||||||||
|
|
|
|||||||||||
(Type/Pint Name and Title)
|
|
(Type/Print Name and Title)
|
Dupont Anesthesia Services, P.S.C.
|
Kentucky
|
|
Erick A. Grana, Inc.
|
Florida
|
|
Great Falls Clinic Surgery Center, L.L.C.
|
Montana
|
|
Honolulu Spine Center, LLC
|
Delaware
|
Honolulu Sports and Spine Center
|
IFSC Acquisition, LLC
|
Delaware
|
|
Jacksonville Beach Surgery Center, L.P.
|
Tennessee
|
Jacksonville Beach Surgery Center
|
Jonesboro Anesthesia Services, LLC
|
Arkansas
|
|
Kent, LLC
|
Rhode Island
|
|
Lake Mary Surgery Center, L.L.C.
|
Florida
|
|
Largo Endoscopy Center, L.P.
|
Tennessee
|
Tampa Bay Regional Surgery Center
|
Largo Surgery, LLC
|
Florida
|
West Bay Surgery Center
|
Laser and Outpatient Surgery Center, LLC
|
Delaware
|
|
Logan Laboratories, LLC
|
Delaware
|
|
Lubbock Heart Hospital, LLC
|
Delaware
|
Lubbock Heart & Surgical Hospital
|
Lubbock Surgicenter, Inc.
|
Texas
|
|
MDN Acquisition Company, Inc.
|
Delaware
|
|
Medical Billing Solutions, LLC
|
Florida
|
|
Midwest Uncuts, Inc.
|
Iowa
|
Midwest Labs
|
Millenia Surgery Center, L.L.C.
|
Florida
|
|
Minimally Invasive Surgical and Neuroscience Center, LLC
|
Delaware
|
|
Montana Health Partners, LLC
|
Montana
|
|
Mountain View Hospital, LLC
|
Delaware
|
|
MV Oncology, LLC
|
Delaware
|
|
MVH Anesthesia, LLC
|
Idaho
|
Eagle Rock Anesthesia
|
MVH Idaho Falls Oncology, LLC
|
Delaware
|
|
MVH SNF Holding, LLC
|
Idaho
|
|
NeoSpine Puyallup Spine Center, LLC
|
Delaware
|
Microsurgical Spine Center
|
NeoSpine Surgery of Bristol, LLC
|
Delaware
|
|
NeoSpine Surgery of Puyallup, LLC
|
Delaware
|
|
NeoSpine Surgery, LLC
|
Delaware
|
|
New Albany Outpatient Surgery, L.P.
|
Delaware
|
|
New Tampa Surgery Center, Ltd.
|
Florida
|
|
Nexus Vision Group, LLC
|
Mississippi
|
|
NMGK, Inc.
|
Illinois
|
|
NMI, Inc.
|
Georgia
|
|
NMLO, Inc.
|
Kansas
|
|
North Dakota Surgery Center, LLC
|
Delaware
|
|
Northwest Ambulatory Surgery Services, LLC
|
Washington
|
Bellingham Ambulatory Surgery Center
|
NovaMed Acquisition Company, Inc.
|
Delaware
|
|
NovaMed Alliance, Inc.
|
Delaware
|
Optical Synergies
|
|
|
Premier Vision Buying Group
|
|
|
The Buyers Edge
|
|
|
The Alliance
|
NovaMed Eye Surgery and Laser Center of St. Joseph, Inc.
|
Missouri
|
|
NovaMed Eye Surgery Center (Plaza), L.L.C.
|
Delaware
|
|
NovaMed Eye Surgery Center of Cincinnati, LLC
|
Delaware
|
|
NovaMed Eye Surgery Center of Maryville, LLC
|
Delaware
|
Eyes of Illinois Surgery Center
|
NovaMed Eye Surgery Center of New Albany, L.L.C.
|
Delaware
|
|
NovaMed Eye Surgery Center of North County, LLC
|
Delaware
|
|
NovaMed Eye Surgery Center of Overland Park, LLC
|
Delaware
|
|
NovaMed Eyecare Research, Inc.
|
Delaware
|
|
NovaMed Management of Kansas City, Inc.
|
Missouri
|
|
NovaMed Management Services, LLC
|
Delaware
|
|
NovaMed of Bethlehem, Inc.
|
Delaware
|
|
NovaMed of Dallas, Inc.
|
Delaware
|
|
NovaMed of Laredo, Inc.
|
Delaware
|
|
NovaMed of Lebanon, Inc.
|
Delaware
|
|
NovaMed of Louisville, Inc.
|
Kentucky
|
|
NovaMed of San Antonio, Inc.
|
Delaware
|
|
NovaMed of Texas, Inc.
|
Delaware
|
|
NovaMed of Wisconsin, Inc.
|
Delaware
|
|
NovaMed Pain Management Center of New Albany, LLC
|
Delaware
|
|
NovaMed Surgery Center of Baton Rouge, LLC
|
Delaware
|
Interventional Pain Management Center
|
NovaMed Surgery Center of Bedford, LLC
|
Delaware
|
NH Eye Surgicenter
|
NovaMed Surgery Center of Chattanooga, LLC
|
Delaware
|
|
NovaMed Surgery Center of Chicago-Northshore, LLC
|
Delaware
|
NovaMed Eye Surgery Center – Northshore
|
NovaMed Surgery Center of Cleveland, LLC
|
Delaware
|
The Surgery Center of Cleveland
|
NovaMed Surgery Center of Colorado Springs, LLC
|
Delaware
|
United Ambulatory Surgery Center
|
NovaMed Surgery Center of Denver, LLC
|
Delaware
|
Colorado Outpatient Eye Surgery Center
|
NovaMed Surgery Center of Jonesboro, LLC
|
Delaware
|
Eye Surgery Center of Arkansas
|
NovaMed Surgery Center of Laredo, LP
|
Delaware
|
|
NovaMed Surgery Center of Madison, Limited Partnership
|
Wisconsin
|
|
NovaMed Surgery Center of Nashua, LLC
|
Delaware
|
Nashua Eye Surgery Center
|
NovaMed Surgery Center of Oak Lawn, LLC
|
Delaware
|
Center for Reconstructive Surgery
|
NovaMed Surgery Center of Orlando, LLC
|
Delaware
|
Downtown Surgery Center
|
NovaMed Surgery Center of Palm Beach, LLC
|
Delaware
|
Palm Beach Outpatient Surgical Center
|
NovaMed Surgery Center of River Forest, LLC
|
Delaware
|
|
NovaMed Surgery Center of San Antonio, L.P.
|
Delaware
|
American Surgery Centers of South Texas
|
NovaMed Surgery Center of Sandusky, LLC
|
Delaware
|
Surgery Center of Sandusky
|
NovaMed Surgery Center of St. Peters, LLC
|
Delaware
|
St. Peters Ambulatory Surgery Center
|
NovaMed Surgery Center of Tyler, L.P.
|
Delaware
|
The Cataract Center of East Texas
|
NovaMed Surgery Center of Warrensburg, LLC
|
Delaware
|
Surgery Center of Warrensburg
|
|
|
Eye Surgery Center of Warrensburg
|
NovaMed Surgery Center of Whittier, LLC
|
Delaware
|
Center for Outpatient Surgery
|
NovaMed, Inc.
|
Delaware
|
Surgery Partners
|
NPR Anesthesia Services, LLC
|
Florida
|
|
Ocala Surgery Center Realty, LLC
|
Tennessee
|
|
Ocean State Endoscopy Holdings, LLC
|
Rhode Island
|
|
Orange City Anesthesia Services, LLC
|
Florida
|
|
Orange City Surgery Center, LLC
|
Florida
|
|
Orthopaedic Surgery Center of Asheville, L.P.
|
Tennessee
|
Orthopaedic Surgery Center of Asheville, Limited
|
Partnership
|
|
|
Palm Bay Surgery Center, LLLP
|
Florida
|
|
Park Place Surgery Center, L.L.C.
|
Florida
|
|
Patient Education Concepts, Inc.
|
Delaware
|
CRM Marketing Group
|
|
|
Centre for Refractive Marketing
|
|
|
Centre for Refractive Marketing Group
|
Physicians Medical Center, L.L.C.
|
Louisiana
|
|
Physicians Surgery Center, LLC
|
Delaware
|
Lee Island Coast Surgery Center
|
Physicians Surgical Care, Inc.
|
Delaware
|
|
Pickaway Surgical Center, Ltd.
|
Ohio
|
Physicians Ambulatory Surgery Center
|
PMCROS, L.L.C.
|
Louisiana
|
|
Portsmouth, LLC
|
Delaware
|
|
PSC Development Company, LLC
|
Delaware
|
|
PSC of New York, L.L.C.
|
Delaware
|
|
PSC Operating Company, LLC
|
Delaware
|
|
PSHS Alpha Partners, Ltd.
|
Florida
|
Lake Worth Surgery Center
|
PSHS Beta Partners, Ltd.
|
Florida
|
The Gables Surgical Center
|
Quahog Holding Company, LLC
|
Delaware
|
|
Rehabilitation Medical Group, Inc.
|
Florida
|
|
Saint Thomas Compounding LLC
|
Florida
|
|
Sarasota Ambulatory Surgery Center, Ltd.
|
Florida
|
|
Sarasota Anesthesia Services, LLC
|
Florida
|
|
SARC/Asheville, Inc.
|
Tennessee
|
|
SARC/Circleville, Inc.
|
Tennessee
|
|
SARC/Ft. Myers, Inc.
|
Tennessee
|
|
SARC/Georgia, Inc.
|
Tennessee
|
|
SARC/Jacksonville, Inc.
|
Tennessee
|
|
SARC/Kent, LLC
|
Tennessee
|
|
SARC/Largo Endoscopy, Inc.
|
Tennessee
|
|
SARC/Largo, Inc.
|
Tennessee
|
|
SARC/Providence, LLC
|
Tennessee
|
|
SARC/San Antonio, LLC
|
Tennessee
|
|
SARC/St. Charles, Inc.
|
Tennessee
|
|
SARC/Vincennes, Inc.
|
Tennessee
|
|
Sentry Anesthesia Management, LLC
|
Georgia
|
|
Sentry Medical Billing, LLC
|
Georgia
|
|
SMBI DOCS, LLC
|
Tennessee
|
|
SMBI Great Falls, LLC
|
Tennessee
|
|
SMBI Havertown, LLC
|
Tennessee
|
|
SMBI Idaho, LLC
|
Tennessee
|
|
SMBI Jackson, LLC
|
Delaware
|
|
SMBI LHH, LLC
|
Delaware
|
|
SMBI Portsmouth, LLC
|
Tennessee
|
|
SMBI STLWSC, LLC
|
Tennessee
|
|
SMBIMS Birmingham, Inc.
|
Tennessee
|
|
SMBIMS Durango, LLC
|
Tennessee
|
|
SMBIMS Florida I, LLC
|
Florida
|
|
SMBIMS Greenville, LLC
|
Tennessee
|
|
SMBIMS Kirkwood, LLC
|
Tennessee
|
|
SMBIMS Novi, LLC
|
Tennessee
|
|
SMBIMS Orange City, LLC
|
Tennessee
|
|
SMBIMS Steubenville, Inc.
|
Tennessee
|
|
SMBIMS Wichita, LLC
|
Tennessee
|
|
SMBISS Beverly Hills, LLC
|
Tennessee
|
|
SMBISS Chesterfield, LLC
|
Tennessee
|
|
SMBISS Encino, LLC
|
Tennessee
|
|
SMBISS Irvine, LLC
|
Tennessee
|
|
SMBISS Thousand Oaks, LLC
|
Tennessee
|
|
Southern Crescent Anesthesiology, PC
|
Georgia
|
|
Southern Crescent Nurse Anesthesia, LLC
|
Georgia
|
|
SP Georgia Management, LLC
|
Georgia
|
|
SP Holdco I, Inc.
|
Delaware
|
|
SP Management Services, Inc.
|
Tennessee
|
SymbionARC Management Services
|
|
|
Surgery Partners Management Services, Inc.
|
|
|
SGRY SP Management Services, Inc.
|
|
|
SGRY Surgery Partners Management Services, Inc.
|
SP North Dakota, LLC
|
Delaware
|
|
SP Practice Management, LLC
|
Delaware
|
|
Space Coast Anesthesia Services, LLC
|
Florida
|
|
Space Coast Surgery Center LLLP
|
Florida
|
|
Specialty Surgical Center of Beverly Hills, L.P.
|
California
|
|
Specialty Surgical Center of Encino, L.P.
|
California
|
|
Specialty Surgical Center of Encino, LLC
|
California
|
|
Specialty Surgical Center of Irvine, L.P.
|
California
|
|
Specialty Surgical Center of Irvine, LLC
|
California
|
|
Specialty Surgical Center, LLC
|
California
|
|
SSC Provider Network, LLC
|
Delaware
|
|
St. Louis Women’s Surgery Center, LLC
|
Delaware
|
|
Suncoast Specialty Surgery Center, LLLP
|
Florida
|
|
Surgery Center Holdings, Inc.
|
Delaware
|
|
Surgery Center Holdings, LLC
|
Delaware
|
|
Surgery Center of Fremont, LLC
|
Delaware
|
|
Surgery Center of Kalamazoo, LLC
|
Michigan
|
|
Surgery Center of Lebanon, LP
|
Pennsylvania
|
Physicians Surgical Center
|
Surgery Center of Pennsylvania, LLC
|
Pennsylvania
|
|
Surgery Center Partners, LLC
|
Delaware
|
Timberlake Surgery Center
|
Surgery Partners Acquisition Company, Inc.
|
Florida
|
|
Surgery Partners of Coral Gables, LLC
|
Florida
|
|
Surgery Partners of Lake Mary, LLC
|
Florida
|
|
Surgery Partners of Lake Worth, LLC
|
Florida
|
|
Surgery Partners of Merritt Island, LLC
|
Florida
|
|
Surgery Partners of Millenia, LLC
|
Florida
|
|
Surgery Partners of New Tampa, LLC
|
Florida
|
|
Surgery Partners of Orlando, LLC
|
Florida
|
|
Surgery Partners of Park Place, LLC
|
Florida
|
|
Surgery Partners of Sarasota, LLC
|
Florida
|
|
Surgery Partners of Suncoast, LLC
|
Florida
|
|
Surgery Partners of West Kendall, L.L.C.
|
Florida
|
|
Surgery Partners of Westchase, LLC
|
Florida
|
|
Surgery Partners, LLC
|
Florida
|
SGRY SP, LLC
|
Surgical Hospital of Austin, L.P.
|
Texas
|
Austin Surgical Hospital
|
Symbion Ambulatory Resource Centres, Inc.
|
Tennessee
|
|
Symbion Anesthesia Services, LLC
|
Delaware
|
|
Symbion Holdings Corporation
|
Delaware
|
|
Symbion JV, LLC
|
Tennessee
|
|
Symbion, Inc.
|
Delaware
|
|
SymbionARC Support Services, LLC
|
Tennessee
|
|
Tampa Pain Relief Center, Inc.
|
Florida
|
Brandon Pain Management
|
|
|
Central Florida Pain Relief Centers - Altamonte Springs
|
1.
|
I have reviewed this annual report on Form 10-K of Surgery Partners, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and
|
c)
|
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
By:
|
/s/ Michael T. Doyle
Michael T. Doyle
Chief Executive Officer
(Principal Executive Officer)
|
1.
|
I have reviewed this annual report on Form 10-K of Surgery Partners, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and
|
c)
|
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
By:
|
/s/ Teresa F. Sparks
Teresa F. Sparks
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
|
1.
|
The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.
|
By:
|
/s/ Michael T. Doyle
Michael T. Doyle
Chief Executive Officer
(Principal Executive Officer)
|
1.
|
The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.
|
By:
|
/s/ Teresa F. Sparks
Teresa F. Sparks
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
|