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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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47-3620923
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Title of Class
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Name of Exchange on Which Registered
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Common Stock, par value $0.01 per share
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NASDAQ Global Select Market
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Large accelerated filer
o
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Accelerated filer
x
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Non-accelerated filer
o
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Smaller reporting company
o
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Emerging growth company
o
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Page
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Item 1.
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Business
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Item 1A.
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Risk Factors
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Item 3.
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Legal Proceedings
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Item 4.
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Mine Safety Disclosures
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Item 5.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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Item 6.
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Selected Financial Data
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Item 7.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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Item 7A.
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Quantitative and Qualitative Disclosure About Market Risk
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Item 8.
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Financial Statements and Supplementary Data
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Item 9.
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Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
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Item 9A.
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Controls and Procedures
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Item 9B.
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Other Information
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PART III
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||
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Item 10.
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Directors, Executive Officers and Corporate Governance
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Item 11.
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Executive Compensation.
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Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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Item 13.
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Certain Relationships and Related Transactions, and Director Independence
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Item 14.
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Principal Accounting Fees and Services
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PART IV
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||
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Item 15.
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Exhibits, Financial Statement Schedules
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Item 16.
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Form 10-K Summary
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•
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the impact of future legislation and other healthcare regulatory reform actions, and the effect of that legislation and other regulatory actions on our business;
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•
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reductions in payments from government healthcare programs and managed care organizations;
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•
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our ability to contract with private third-party payors;
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•
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changes in our payor mix or surgical case mix;
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•
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failure to maintain relationships with our physicians on beneficial terms, or at all;
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•
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the impact of payor controls designed to reduce the number of surgical procedures;
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•
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our efforts to integrate operations of acquired businesses and surgical facilities, attract new physician partners, or acquire additional surgical facilities;
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•
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shortages or quality control issues with surgery-related products, equipment and medical supplies;
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•
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competition for physicians, nurses, strategic relationships, acquisitions and managed care contracts;
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•
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our ability to attract and retain qualified healthcare professionals;
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•
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our ability to enforce non-compete restrictions against our physicians;
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•
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our ability to manage material liabilities incurred as a result of acquiring surgical facilities;
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•
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economic and competitive conditions;
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•
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the outcome of legal and regulatory proceedings that have or may be brought against us;
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•
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changes in the regulatory, economic and other conditions of the states where our surgical facilities are located;
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•
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substantial payments we are required to make under the TRA;
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•
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our substantial indebtedness.
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•
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Deliver outstanding patient care and clinical outcomes;
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•
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Continue to execute and expand upon our physician engagement strategy in attractive markets;
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•
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Become the partner of choice for physicians seeking to become or stay independent;
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•
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Drive organic growth at existing facilities through targeted physician recruitment, service line expansion and implementing our efficient operating model;
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•
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Seek partnership opportunities with payors to make healthcare more affordable for their members;
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•
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Continue our disciplined acquisition strategy;
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•
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Introduce new service offerings to provide a more comprehensive continuum of care; and
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•
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Enhance operational efficiencies and productivity by delivering on integration.
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Year Ended December 31,
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|||||||
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2017
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2016
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2015
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|||
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|||
Private Insurance
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54
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%
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51
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%
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55
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%
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Government
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38
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%
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40
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%
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38
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%
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Self-pay
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2
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%
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2
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%
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2
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%
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Other
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6
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%
|
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7
|
%
|
|
5
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%
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Total patient service revenues
|
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100
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%
|
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100
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%
|
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100
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%
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•
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Diagnostic Laboratory:
We offer physicians toxicology testing services through our diagnostic laboratory, Logan Laboratories, a wholly-owned subsidiary 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. Our diagnostic laboratory offerings support the needs of our physicians across our existing specialties and new service lines.
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•
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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 business 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.
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•
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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 of
December 31, 2017
, 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.
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•
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The ASC 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).
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•
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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.
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•
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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.
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•
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Physician-investors must have fully informed their referred patients of the physician’s investment.
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•
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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.
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•
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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.
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•
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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.
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•
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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.
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•
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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 center and may not be billed separately.
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•
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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.
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•
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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.
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•
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No hospital-investor may be in a position to make or influence referrals directly or indirectly to any other investor or the center.
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•
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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;
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•
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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;
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•
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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;
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•
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a requirement that return on investment be proportionate to the investment by each investor;
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•
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restrictions on preferential treatment of physician versus non-physician investors;
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•
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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;
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•
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a prohibition on the hospital or other investors from providing financing to physician investors;
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•
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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
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•
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a prohibition on “grandfathered” status for any physician owned hospital that converted from an ASC to a hospital on or after March 23, 2010.
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•
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making it more difficult for us to satisfy our obligations with respect to our indebtedness;
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•
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making us more vulnerable to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;
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•
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requiring us to dedicate a substantial portion of our cash flow to making payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes;
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•
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limiting our flexibility in reacting to competitive and other changes in our industry and economic conditions generally; and
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•
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limiting our ability to borrow additional funds for working capital, capital expenditures, acquisitions, debt service requirements, execution of our business strategy or other general corporate purposes;
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•
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incur additional indebtedness and guarantee indebtedness;
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•
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pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock;
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•
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prepay, redeem or repurchase certain debt;
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•
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make loans and investments;
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•
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sell or otherwise dispose of assets;
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•
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sell stock of our subsidiaries;
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•
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incur liens;
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•
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enter into transactions with affiliates;
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•
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enter into agreements restricting certain of our subsidiaries’ ability to pay dividends; and
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•
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consolidate, merge or sell all or substantially all of our assets
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•
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the collapse or insolvency of our insurance carriers;
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•
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further increases in premiums and deductibles;
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•
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increases in the number of liability claims against us or the cost of settling or trying cases related to those claims; or
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•
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an inability to obtain one or more types of insurance on acceptable terms, if at all.
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•
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disputes between payors as to which party is responsible for payment;
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•
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failure of information systems and processes to submit and collect claims in a timely manner;
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•
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variation in coverage for similar services among various payors;
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•
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the difficulty of adherence to specific compliance requirements, diagnosis coding and other procedures mandated by various payors; and
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•
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failure to obtain proper physician credentialing and documentation in order to bill various payors.
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•
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reducing the highest marginal U.S. federal corporate income tax rate from 35% to 21% for tax years beginning after December 31, 2017;
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•
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limiting the extent to which net operating losses can be utilized against taxable income that would apply to losses created after December 31, 2017;
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•
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changing rules related to the ability to apply net operating losses against later or earlier tax years that would apply to losses created after December 31, 2017;
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•
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creating a new limitation on deductible interest expense for tax years beginning after December 31, 2017;
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•
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eliminating the corporate alternative minimum tax (“AMT”) and changing how existing AMT credits can be realized for tax years beginning after December 31, 2017; and
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•
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generally repealing the performance-based compensation exception to the Section 162(m) $1.0 million deduction limitation and revising the definition of a covered employee for tax years beginning after December 31, 2017.
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•
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changes in the valuation of our deferred tax assets and liabilities;
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•
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expected timing and amount of the release of any tax valuation allowances;
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•
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tax effects of equity-based compensation;
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•
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costs related to intercompany restructurings;
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•
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changes in tax laws, regulations or interpretations thereof; or
|
•
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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.
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•
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ownership and control of our facilities;
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•
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operating policies and procedures;
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•
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qualification, training and supervision of medical and support persons;
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•
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pricing of, billing for and coding of services and properly handling overpayments, debt collection practices and the submission of false statements or claims;
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•
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the necessity, appropriateness and adequacy of medical care, equipment, personnel, operating policies and procedures; maintenance and preservation of medical records;
|
•
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financial arrangements between referral sources and our facilities;
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•
|
the protection of privacy, including patient and credit card information;
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•
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screening, stabilization and transfer of individuals who have emergency medical conditions and provision of emergency services;
|
•
|
antitrust;
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•
|
building codes;
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•
|
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.
|
•
|
the responses of individuals, businesses and other market participants to the evolving choices and obligations under the Affordable Care Act;
|
•
|
the states’ decisions whether to implement the Medicaid expansion provisions of the Affordable Care Act, and under what terms;
|
•
|
the effect of value-based purchasing and other quality programs established under the Affordable Care Act;
|
•
|
the scope and nature of changes to Medicare reimbursement methods and programs, including accountable care organizations, bundled payment programs and other coordinated care models;
|
•
|
the financial sustainability of the Health Insurance Marketplace, which may be impacted by whether a sufficient number of payors participate;
|
•
|
our ability to participate in health insurance plans offered through the Health Insurance Marketplaces and the terms of our participation;
|
•
|
the net effect of reductions in federal healthcare program spending under the Affordable Care Act; and
|
•
|
the resolution of new and ongoing legislative and legal challenges to the Affordable Care Act.
|
•
|
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
|
•
|
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;
|
•
|
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;
|
•
|
our limited public float;
|
•
|
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.
|
|
|
High
|
|
Low
|
||||
2017
|
|
|
|
|
||||
First quarter
|
|
$
|
22.85
|
|
|
$
|
15.10
|
|
Second quarter
|
|
24.05
|
|
|
17.00
|
|
||
Third quarter
|
|
22.85
|
|
|
8.53
|
|
||
Fourth quarter
|
|
12.78
|
|
|
7.10
|
|
||
2016
|
|
|
|
|
||||
First quarter
|
|
$
|
20.40
|
|
|
$
|
11.97
|
|
Second quarter
|
|
18.45
|
|
|
11.76
|
|
||
Third quarter
|
|
20.78
|
|
|
15.94
|
|
||
Fourth quarter
|
|
20.93
|
|
|
13.60
|
|
|
|
10/1/2015
|
|
12/31/2015
|
|
6/30/2016
|
|
12/31/2016
|
|
6/30/2017
|
|
12/31/2017
|
||||||||||||
Surgery Partners, Inc.
|
|
$
|
100.00
|
|
|
$
|
113.14
|
|
|
$
|
98.84
|
|
|
$
|
87.52
|
|
|
$
|
125.62
|
|
|
$
|
66.81
|
|
NASDAQ Composite Index
|
|
$
|
100.00
|
|
|
$
|
108.22
|
|
|
$
|
104.66
|
|
|
$
|
116.34
|
|
|
$
|
132.71
|
|
|
$
|
149.20
|
|
Dow Jones U.S. Health Care Providers Index
|
|
$
|
100.00
|
|
|
$
|
100.34
|
|
|
$
|
104.84
|
|
|
$
|
107.40
|
|
|
$
|
125.66
|
|
|
$
|
141.60
|
|
|
|
Total Number of Shares Purchased
(1)
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Programs
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
|
||||||
(in thousands, except share and per share amounts)
|
|
|
|
|
|
|
|
|
||||||
October 1, 2017 to October 31, 2017
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
November 1, 2017 to November 30, 2017
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
December 1, 2017 to December 31, 2017
|
|
194,267
|
|
|
$
|
11.19
|
|
|
180,664
|
|
|
$
|
47,991
|
|
Total
|
|
194,267
|
|
|
|
|
180,664
|
|
|
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
1,341,219
|
|
|
$
|
1,145,438
|
|
|
$
|
959,891
|
|
|
$
|
403,289
|
|
|
$
|
284,599
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss)
|
|
$
|
28,736
|
|
|
$
|
85,083
|
|
|
$
|
72,845
|
|
|
$
|
(27,052
|
)
|
|
$
|
17,727
|
|
Less: Net income attributable to non-controlling interests
|
|
(81,721
|
)
|
|
(75,630
|
)
|
|
(71,416
|
)
|
|
(38,845
|
)
|
|
(26,789
|
)
|
|||||
Net (loss) income attributable to Surgery Partners, Inc.
|
|
(52,985
|
)
|
|
9,453
|
|
|
1,429
|
|
|
(65,897
|
)
|
|
(9,062
|
)
|
|||||
Less: Amounts attributable to participating securities
(1)
|
|
(26,047
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net (loss) income attributable to common stockholders
|
|
$
|
(79,032
|
)
|
|
$
|
9,453
|
|
|
$
|
1,429
|
|
|
$
|
(65,897
|
)
|
|
$
|
(9,062
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Per common share data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
(1.64
|
)
|
|
$
|
0.20
|
|
|
$
|
0.04
|
|
|
$
|
(2.04
|
)
|
|
$
|
(0.28
|
)
|
Diluted
(2)
|
|
$
|
(1.64
|
)
|
|
$
|
0.20
|
|
|
$
|
0.04
|
|
|
$
|
(2.04
|
)
|
|
$
|
(0.28
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Consolidated Balance Sheets Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Working capital
|
|
$
|
260,220
|
|
|
$
|
175,230
|
|
|
$
|
129,668
|
|
|
$
|
127,258
|
|
|
$
|
40,056
|
|
Total assets
|
|
4,622,773
|
|
|
2,304,958
|
|
|
2,104,443
|
|
|
1,855,771
|
|
|
470,929
|
|
|||||
Long-term debt, less current maturities
|
|
2,130,556
|
|
|
1,414,421
|
|
|
1,228,112
|
|
|
1,336,243
|
|
|
414,787
|
|
|||||
Redeemable preferred stock
|
|
330,806
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total stockholders’ equity (deficit)
|
|
1,336,610
|
|
|
324,674
|
|
|
297,927
|
|
|
29,536
|
|
|
(14,375
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Statements of Cash Flows Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by operating activities
|
|
$
|
120,943
|
|
|
$
|
125,239
|
|
|
$
|
84,481
|
|
|
$
|
21,949
|
|
|
$
|
49,078
|
|
Net cash used in investing activities
|
|
(783,449
|
)
|
|
(184,749
|
)
|
|
(134,842
|
)
|
|
(271,106
|
)
|
|
(3,622
|
)
|
|||||
Net cash provided by (used in) financing activities
|
|
767,721
|
|
|
71,276
|
|
|
33,374
|
|
|
310,961
|
|
|
(37,662
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Adjusted EBITDA
(3)
|
|
$
|
164,301
|
|
|
$
|
179,263
|
|
|
$
|
158,053
|
|
|
$
|
77,034
|
|
|
$
|
57,900
|
|
Adjusted EBITDA as a % of revenues
|
|
12.3
|
%
|
|
15.7
|
%
|
|
16.5
|
%
|
|
19.1
|
%
|
|
20.3
|
%
|
|||||
Number of surgical facilities as of the end of period
(4)
|
|
124
|
|
|
104
|
|
|
101
|
|
|
103
|
|
|
47
|
|
|||||
Number of consolidated surgical facilities included as of the end of period
|
|
108
|
|
|
94
|
|
|
90
|
|
|
91
|
|
|
47
|
|
(4)
|
Includes surgical facilities that we manage but in which we have no ownership interest.
|
|
|
Year Ended December 31,
|
|||||||
|
|
2017
|
|
2016
|
|
2015
|
|||
Patient service revenues:
|
|
|
|
|
|
|
|||
Surgical facilities revenues
|
|
92.7
|
%
|
|
90.3
|
%
|
|
91.6
|
%
|
Ancillary services revenues
|
|
5.7
|
%
|
|
7.9
|
%
|
|
6.4
|
%
|
|
|
98.4
|
%
|
|
98.2
|
%
|
|
98.0
|
%
|
Other service revenues:
|
|
|
|
|
|
|
|||
Optical services revenues
|
|
0.8
|
%
|
|
1.1
|
%
|
|
1.5
|
%
|
Other
|
|
0.8
|
%
|
|
0.7
|
%
|
|
0.5
|
%
|
|
|
1.6
|
%
|
|
1.8
|
%
|
|
2.0
|
%
|
Total revenues
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
Year Ended December 31,
|
|||||||
|
|
2017
|
|
2016
|
|
2015
|
|||
|
|
|
|
|
|
|
|||
Private insurance payors
|
|
53.6
|
%
|
|
51.5
|
%
|
|
55.0
|
%
|
Government payors
|
|
38.3
|
%
|
|
39.9
|
%
|
|
38.2
|
%
|
Self-pay payors
|
|
2.4
|
%
|
|
1.8
|
%
|
|
1.7
|
%
|
Other payors
(1)
|
|
5.7
|
%
|
|
6.8
|
%
|
|
5.1
|
%
|
Total
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
Year Ended December 31,
|
|||||||
|
|
2017
|
|
2016
|
|
2015
|
|||
|
|
|
|
|
|
|
|||
Gastrointestinal
|
|
22.3
|
%
|
|
22.7
|
%
|
|
22.2
|
%
|
General surgery
|
|
2.7
|
%
|
|
2.4
|
%
|
|
2.9
|
%
|
Ophthalmology
|
|
27.9
|
%
|
|
29.4
|
%
|
|
30.0
|
%
|
Orthopedics and pain management
|
|
34.5
|
%
|
|
32.4
|
%
|
|
30.5
|
%
|
Other
|
|
12.6
|
%
|
|
13.1
|
%
|
|
14.4
|
%
|
Total
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
Year Ended December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
|
|
||
Cases
(1)
|
|
550,405
|
|
|
545,718
|
|
||
Case growth
|
|
0.9
|
%
|
|
N/A
|
|
||
Revenues per case
(1)
|
|
$
|
3,309
|
|
|
$
|
3,189
|
|
Revenues per case growth
|
|
3.8
|
%
|
|
N/A
|
|
||
Number of facilities
|
|
—
|
|
|
N/A
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Revenues:
|
|
|
|
|
|
|
||||||
Surgical facility services
|
|
$
|
1,253,183
|
|
|
$
|
1,042,097
|
|
|
$
|
884,144
|
|
Ancillary services
|
|
76,921
|
|
|
90,836
|
|
|
61,175
|
|
|||
Optical services
|
|
11,115
|
|
|
12,505
|
|
|
14,572
|
|
|||
Total revenues
|
|
$
|
1,341,219
|
|
|
$
|
1,145,438
|
|
|
$
|
959,891
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Adjusted EBITDA:
|
|
|
|
|
|
|
||||||
Surgical facility services
|
|
$
|
229,672
|
|
|
$
|
214,218
|
|
|
$
|
180,113
|
|
Ancillary services
|
|
(8,781
|
)
|
|
12,685
|
|
|
18,715
|
|
|||
Optical services
|
|
2,950
|
|
|
3,308
|
|
|
3,905
|
|
|||
All other
|
|
(59,540
|
)
|
|
(50,948
|
)
|
|
(44,680
|
)
|
|||
Total Adjusted EBITDA
(1)
|
|
$
|
164,301
|
|
|
$
|
179,263
|
|
|
$
|
158,053
|
|
|
|
December 31,
2017 |
|
December 31,
2016 |
||||
Assets:
|
|
|
|
|
||||
Surgical facility services
|
|
$
|
4,072,521
|
|
|
$
|
1,914,842
|
|
Ancillary services
|
|
104,274
|
|
|
184,002
|
|
||
Optical services
|
|
48,309
|
|
|
22,478
|
|
||
All other
|
|
397,669
|
|
|
183,636
|
|
||
Total assets
|
|
$
|
4,622,773
|
|
|
$
|
2,304,958
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Supplemental Information:
|
|
|
|
|
|
|
||||||
Cash purchases of property and equipment, net:
|
|
|
|
|
|
|
||||||
Surgical facility services
|
|
$
|
23,916
|
|
|
$
|
29,157
|
|
|
26,723
|
|
|
Ancillary services
|
|
2,066
|
|
|
5,388
|
|
|
1,051
|
|
|||
Optical services
|
|
156
|
|
|
351
|
|
|
128
|
|
|||
All other
|
|
3,462
|
|
|
4,213
|
|
|
5,537
|
|
|||
Total cash purchases of property and equipment, net
|
|
$
|
29,600
|
|
|
$
|
39,109
|
|
|
$
|
33,439
|
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||
|
|
Amount
|
|
% of Revenues
|
|
Amount
|
|
% of Revenues
|
|
Amount
|
|
% of Revenues
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Revenues
|
|
$
|
1,341,219
|
|
|
100.0
|
%
|
|
$
|
1,145,438
|
|
|
100.0
|
%
|
|
$
|
959,891
|
|
|
100.0
|
%
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of revenues
|
|
1,013,800
|
|
|
75.6
|
%
|
|
821,196
|
|
|
71.7
|
%
|
|
669,326
|
|
|
69.7
|
%
|
|||
General and administrative expenses
(1)
|
|
75,950
|
|
|
5.7
|
%
|
|
60,246
|
|
|
5.3
|
%
|
|
55,992
|
|
|
5.8
|
%
|
|||
Depreciation and amortization
|
|
51,928
|
|
|
3.9
|
%
|
|
39,551
|
|
|
3.5
|
%
|
|
34,545
|
|
|
3.6
|
%
|
|||
Provision for doubtful accounts
|
|
28,752
|
|
|
2.1
|
%
|
|
24,212
|
|
|
2.1
|
%
|
|
23,578
|
|
|
2.5
|
%
|
|||
Income from equity investments
|
|
(6,467
|
)
|
|
(0.5
|
)%
|
|
(4,764
|
)
|
|
(0.4
|
)%
|
|
(3,777
|
)
|
|
(0.4
|
)%
|
|||
Loss (gain) on disposal or impairment of long-lived assets, net
|
|
1,720
|
|
|
0.1
|
%
|
|
2,355
|
|
|
0.2
|
%
|
|
(2,097
|
)
|
|
(0.2
|
)%
|
|||
Merger transaction and integration costs
|
|
13,054
|
|
|
1.0
|
%
|
|
8,738
|
|
|
0.8
|
%
|
|
17,920
|
|
|
1.9
|
%
|
|||
Loss on debt refinancing
|
|
18,211
|
|
|
1.4
|
%
|
|
11,876
|
|
|
1.0
|
%
|
|
16,102
|
|
|
1.7
|
%
|
|||
Gain on litigation settlements
|
|
(12,534
|
)
|
|
(0.9
|
)%
|
|
(14,101
|
)
|
|
(1.2
|
)%
|
|
—
|
|
|
—
|
%
|
|||
Gain on acquisition escrow release
|
|
(1,167
|
)
|
|
(0.1
|
)%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|||
Termination of management agreement and IPO costs
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
5,834
|
|
|
0.6
|
%
|
|||
Electronic health records incentive income
|
|
(260
|
)
|
|
—
|
%
|
|
(408
|
)
|
|
—
|
%
|
|
(1,761
|
)
|
|
(0.2
|
)%
|
|||
Other (income) expense
|
|
(2
|
)
|
|
—
|
%
|
|
55
|
|
|
—
|
%
|
|
(525
|
)
|
|
(0.1
|
)%
|
|||
Total operating expenses
|
|
1,182,985
|
|
|
88.2
|
%
|
|
948,956
|
|
|
82.8
|
%
|
|
815,137
|
|
|
84.9
|
%
|
|||
Operating income
|
|
158,234
|
|
|
11.8
|
%
|
|
196,482
|
|
|
17.2
|
%
|
|
144,754
|
|
|
15.1
|
%
|
|||
Gain on amendment to tax receivable agreement
|
|
16,392
|
|
|
1.2
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|||
Tax receivable agreement benefit (expense)
|
|
25,329
|
|
|
1.9
|
%
|
|
(3,733
|
)
|
|
(0.3
|
)%
|
|
(119,911
|
)
|
|
(12.5
|
)%
|
|||
Interest expense, net
|
|
(117,669
|
)
|
|
(8.8
|
)%
|
|
(100,571
|
)
|
|
(8.8
|
)%
|
|
(100,980
|
)
|
|
(10.5
|
)%
|
|||
Income (loss) before income taxes
|
|
82,286
|
|
|
6.1
|
%
|
|
92,178
|
|
|
8.0
|
%
|
|
(76,137
|
)
|
|
(7.9
|
)%
|
|||
Income tax expense (benefit)
|
|
53,550
|
|
|
4.0
|
%
|
|
7,095
|
|
|
0.6
|
%
|
|
(148,982
|
)
|
|
(15.5
|
)%
|
|||
Net income
|
|
28,736
|
|
|
2.1
|
%
|
|
85,083
|
|
|
7.4
|
%
|
|
72,845
|
|
|
7.6
|
%
|
|||
Less: Net income attributable to non-controlling interests
|
|
(81,721
|
)
|
|
(6.1
|
)%
|
|
(75,630
|
)
|
|
(6.6
|
)%
|
|
(71,416
|
)
|
|
(7.4
|
)%
|
|||
Net (loss) income attributable to Surgery Partners, Inc.
|
|
$
|
(52,985
|
)
|
|
(4.0
|
)%
|
|
$
|
9,453
|
|
|
0.8
|
%
|
|
$
|
1,429
|
|
|
0.1
|
%
|
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
|
2017
|
|
2016
|
|
Dollar
Variance
|
|
Percent
Variance
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
Patient service revenues
|
|
$
|
1,320,211
|
|
|
$
|
1,124,604
|
|
|
$
|
195,607
|
|
|
17.4
|
%
|
Optical service revenues
|
|
11,115
|
|
|
12,505
|
|
|
(1,390
|
)
|
|
(11.1
|
)%
|
|||
Other service revenues
|
|
9,893
|
|
|
8,329
|
|
|
1,564
|
|
|
18.8
|
%
|
|||
Total revenues
|
|
$
|
1,341,219
|
|
|
$
|
1,145,438
|
|
|
$
|
195,781
|
|
|
17.1
|
%
|
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
|
2016
|
|
2015
|
|
Dollar
Variance
|
|
Percent
Variance
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
Patient service revenues
|
|
$
|
1,124,604
|
|
|
$
|
940,711
|
|
|
$
|
183,893
|
|
|
19.5
|
%
|
Optical service revenues
|
|
12,505
|
|
|
14,572
|
|
|
(2,067
|
)
|
|
(14.2
|
)%
|
|||
Other service revenues
|
|
8,329
|
|
|
4,608
|
|
|
3,721
|
|
|
80.8
|
%
|
|||
Total revenues
|
|
$
|
1,145,438
|
|
|
$
|
959,891
|
|
|
$
|
185,547
|
|
|
19.3
|
%
|
|
|
December 31,
2017 |
|
December 31,
2016 |
||||
|
|
|
|
|
||||
2014 Revolver Loan
|
|
$
|
—
|
|
|
$
|
85,000
|
|
2014 First Lien Credit Agreement
|
|
—
|
|
|
932,000
|
|
||
2017 Senior Secured Credit Facilities:
|
|
|
|
|
||||
Revolver
|
|
—
|
|
|
—
|
|
||
Term Loan
(1)
|
|
1,280,532
|
|
|
—
|
|
||
Senior Unsecured Notes due 2021
(2)
|
|
409,235
|
|
|
400,000
|
|
||
Senior Unsecured Notes due 2025
|
|
370,000
|
|
|
—
|
|
||
Subordinated Notes
|
|
—
|
|
|
1,000
|
|
||
Notes payable and secured loans
|
|
101,921
|
|
|
42,521
|
|
||
Capital lease obligations
|
|
27,594
|
|
|
13,996
|
|
||
Less: unamortized debt issuance costs and discount
|
|
—
|
|
|
(32,274
|
)
|
||
Total debt
|
|
2,189,282
|
|
|
1,442,243
|
|
||
Less: Current maturities
|
|
58,726
|
|
|
27,822
|
|
||
Total long-term debt
|
|
$
|
2,130,556
|
|
|
$
|
1,414,421
|
|
April 15, 2018 to April 14, 2019
|
106.656
|
%
|
April 15, 2019 to April 14, 2020
|
104.438
|
%
|
April 15, 2020 and thereafter
|
100.000
|
%
|
July 1, 2020 to June 30, 2021
|
103.375
|
%
|
July 1, 2021 to June 30, 2022
|
101.688
|
%
|
July 1, 2022 and thereafter
|
100.000
|
%
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Consolidated Statements of Operations Data (in thousands):
|
|
|
|
|
|
|
||||||
Income (loss) before income taxes
|
|
$
|
82,286
|
|
|
$
|
92,178
|
|
|
$
|
(76,137
|
)
|
(Minus):
|
|
|
|
|
|
|
||||||
Net income attributable to non-controlling interests
|
|
81,721
|
|
|
75,630
|
|
|
71,416
|
|
|||
Plus:
|
|
|
|
|
|
|
||||||
Interest expense, net
|
|
117,669
|
|
|
100,571
|
|
|
100,980
|
|
|||
Depreciation and amortization
|
|
51,928
|
|
|
39,551
|
|
|
34,545
|
|
|||
EBITDA
|
|
170,162
|
|
|
156,670
|
|
|
(12,028
|
)
|
|||
Plus (minus):
|
|
|
|
|
|
|
||||||
Non-cash stock compensation expense
|
|
5,584
|
|
|
2,021
|
|
|
7,502
|
|
|||
Contingent acquisition compensation expense
|
|
7,039
|
|
|
5,092
|
|
|
—
|
|
|||
Termination of management agreement and IPO costs
|
|
—
|
|
|
—
|
|
|
5,834
|
|
|||
Management fee
(1)
|
|
—
|
|
|
—
|
|
|
2,250
|
|
|||
Merger transaction, integration and practice acquisition costs
(2)
|
|
17,007
|
|
|
11,617
|
|
|
20,579
|
|
|||
Gain on litigation settlements
|
|
(12,534
|
)
|
|
(14,101
|
)
|
|
—
|
|
|||
Gain on acquisition escrow release
|
|
(1,167
|
)
|
|
—
|
|
|
—
|
|
|||
Loss (gain) on disposal or impairment of long-lived assets, net
|
|
1,720
|
|
|
2,355
|
|
|
(2,097
|
)
|
|||
Gain on amendment to tax receivable agreement
|
|
(16,392
|
)
|
|
—
|
|
|
—
|
|
|||
Tax receivable agreement (benefit) expense
|
|
(25,329
|
)
|
|
3,733
|
|
|
119,911
|
|
|||
Loss on debt refinancing
|
|
18,211
|
|
|
11,876
|
|
|
16,102
|
|
|||
Adjusted EBITDA
|
|
164,301
|
|
|
179,263
|
|
|
158,053
|
|
|||
Hurricane estimated impact
|
|
5,000
|
|
|
—
|
|
|
—
|
|
|||
Reserve adjustment
|
|
14,868
|
|
|
—
|
|
|
—
|
|
|||
Normalized Adjusted EBITDA
|
|
$
|
184,169
|
|
|
$
|
179,263
|
|
|
$
|
158,053
|
|
|
|
Twelve Months Ended December 31, 2017
|
||
|
|
|
||
Cash flows from operating activities
|
|
$
|
120,943
|
|
Adjustments to reconcile cash flows from operating activities to income before income taxes:
|
|
|
||
Depreciation and amortization
|
|
(51,928
|
)
|
|
Amortization of debt issuance costs, discounts and premium
|
|
(4,532
|
)
|
|
Amortization of unfavorable lease liability
|
|
438
|
|
|
Equity-based compensation
|
|
(5,584
|
)
|
|
Loss on disposal or impairment of long-lived assets, net
|
|
(1,720
|
)
|
|
Gain on legal settlements
|
|
8,740
|
|
|
Loss on debt refinancing
|
|
(18,211
|
)
|
|
Gain on amendment to tax receivable agreement
|
|
16,392
|
|
|
Tax receivable agreement benefit
|
|
25,329
|
|
|
Deferred income taxes
|
|
(52,328
|
)
|
|
Provision for doubtful accounts
|
|
(28,752
|
)
|
|
Income from equity investments, net of distributions received
|
|
(1,167
|
)
|
|
Changes in operating assets and liabilities, net of acquisitions and divestitures
|
|
21,116
|
|
|
Income tax expense
|
|
53,550
|
|
|
Income before income taxes
|
|
82,286
|
|
|
(Minus):
|
|
|
||
Net income attributable to non-controlling interests
|
|
81,721
|
|
|
Plus (minus):
|
|
|
||
Interest expense, net
|
|
117,669
|
|
|
Depreciation and amortization
|
|
51,928
|
|
|
Non-cash stock compensation expense
|
|
5,584
|
|
|
Contingent acquisition compensation expense
|
|
7,039
|
|
|
Merger transaction, integration and practice acquisition costs
|
|
17,007
|
|
|
Gain on litigation settlements
|
|
(12,534
|
)
|
|
Gain on acquisition escrow release
|
|
(1,167
|
)
|
|
Loss on disposal or impairment of long-lived assets, net
|
|
1,720
|
|
|
Gain on amendment to tax receivable agreement
|
|
(16,392
|
)
|
|
Tax receivable agreement benefit
|
|
(25,329
|
)
|
|
Loss on debt refinancing
|
|
18,211
|
|
|
Hurricane estimated impact
|
|
5,000
|
|
|
Reserve impact
|
|
14,868
|
|
|
Normalized Adjusted EBITDA
|
|
184,169
|
|
|
Plus:
|
|
|
||
Acquisitions
(1)
|
|
94,650
|
|
|
Non-cash expenses
|
|
1,811
|
|
|
Credit Agreement EBITDA
|
|
$
|
280,630
|
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
|
Total
|
|
Less than 1 year
|
|
1-3 years
|
|
4-5 years
|
|
More than 5 years
|
||||||||||
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt obligations, including interest
(1)
|
|
$
|
2,643,403
|
|
|
$
|
174,406
|
|
|
$
|
1,533,085
|
|
|
$
|
484,374
|
|
|
$
|
451,538
|
|
Capital lease obligations, including interest
|
|
33,314
|
|
|
9,100
|
|
|
12,424
|
|
|
5,491
|
|
|
6,299
|
|
|||||
Operating lease obligations
(2)
|
|
564,716
|
|
|
67,513
|
|
|
129,871
|
|
|
109,140
|
|
|
258,192
|
|
|||||
Other financing obligations, including interest
(3)
|
|
187,476
|
|
|
12,307
|
|
|
25,628
|
|
|
27,043
|
|
|
122,498
|
|
|||||
Tax receivable agreement
|
|
65,141
|
|
|
537
|
|
|
23,613
|
|
|
39,218
|
|
|
1,773
|
|
|||||
Total contractual obligations
|
|
$
|
3,494,050
|
|
|
$
|
263,863
|
|
|
$
|
1,724,621
|
|
|
$
|
665,266
|
|
|
$
|
840,300
|
|
•
|
We intend to enhance the design of our controls and implement policies setting forth specific requirements for documentation related to our controls with respect to revenue, accounts receivable and related allowances;
|
•
|
We intend to implement additional review and analysis procedures to ensure that our policies are being followed; and
|
•
|
We will evaluate whether additional internal resources are required to effectively implement additional review and analysis procedures over the assumptions, inputs and methodologies used by third-party valuation specialists.
|
No.
|
|
Description
|
|
|
|
2.1
|
|
|
2.2
|
|
|
3.1
|
|
|
3.2
|
|
|
3.3
|
|
|
4.1
|
|
|
4.2
|
|
|
4.3
|
|
|
4.4
|
|
|
4.5
|
|
|
10.1
|
|
|
10.2
|
|
|
10.3
|
|
|
10.4
|
|
|
10.5
|
|
|
10.6
|
|
|
10.7
|
|
|
10.8
|
|
10.9
|
|
|
10.10
|
|
|
10.11
|
|
|
10.12
|
|
|
10.13 (a)
|
|
|
10.14 (a)
|
|
|
10.15 (a)
|
|
|
10.16 (a)
|
|
|
10.17 (a)
|
|
|
10.18 (a)
|
|
|
10.19 (a)
|
|
|
10.20 (a)
|
|
|
10.21 (a)
|
|
|
10.22 (a)
|
|
|
10.23 (a)
|
|
|
10.24 (a)
|
|
|
10.25 (a)
|
|
|
10.26 (a)
|
|
|
10.27 (a)
|
|
|
10.28 (a)
|
|
|
10.29 (a)
|
|
|
10.30 (a)
|
|
|
10.31 (a)
|
|
|
10.32 (a)
|
|
|
10.33 (a)
|
|
|
10.34 (a)
|
|
|
10.35 (a)
|
|
|
10.36 (a)
|
|
|
10.37 (a)
|
|
|
21.1
|
|
|
23.1
|
|
|
Page
|
|
|
Report of Independent Registered Public Accounting Firm
|
|
Consolidated Balance Sheets - December 31, 2017 and 2016
|
|
Consolidated Statements of Operations - for the years ended December 31, 2017, 2016 and 2015
|
|
Consolidated Statements of Comprehensive Income (Loss) - for the years ended December 31, 2017, 2016 and 2015
|
|
Consolidated Statements of Stockholders' Equity - for the years ended December 31, 2017, 2016 and 2015
|
|
Consolidated Statements of Cash Flows - for the years ended December 31, 2017, 2016 and 2015
|
|
Notes to Consolidated Financial Statements
|
|
|
Successor
|
|
|
|
Predecessor
|
||||
|
|
December 31,
2017 |
|
|
|
December 31,
2016 |
||||
ASSETS
|
|
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
174,914
|
|
|
|
|
$
|
69,699
|
|
Accounts receivable, less allowance for doubtful accounts of $2,026 and $29,872, respectively
|
|
288,023
|
|
|
|
|
220,594
|
|
||
Inventories
|
|
44,951
|
|
|
|
|
28,777
|
|
||
Prepaid expenses and other current assets
|
|
55,337
|
|
|
|
|
42,885
|
|
||
Total current assets
|
|
563,225
|
|
|
|
|
361,955
|
|
||
Property and equipment, net
|
|
398,536
|
|
|
|
|
204,253
|
|
||
Intangible assets, net
|
|
58,908
|
|
|
|
|
48,023
|
|
||
Goodwill
|
|
3,346,838
|
|
|
|
|
1,555,204
|
|
||
Investments in and advances to affiliates
|
|
74,282
|
|
|
|
|
34,980
|
|
||
Restricted invested assets
|
|
315
|
|
|
|
|
315
|
|
||
Long-term deferred tax assets
|
|
132,319
|
|
|
|
|
83,793
|
|
||
Other long-term assets
|
|
48,350
|
|
|
|
|
16,435
|
|
||
Total assets
|
|
$
|
4,622,773
|
|
|
|
|
$
|
2,304,958
|
|
|
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
|
|
||||
Accounts payable
|
|
$
|
84,710
|
|
|
|
|
$
|
49,766
|
|
Accrued payroll and benefits
|
|
49,625
|
|
|
|
|
29,273
|
|
||
Other current liabilities
|
|
109,944
|
|
|
|
|
79,864
|
|
||
Current maturities of long-term debt
|
|
58,726
|
|
|
|
|
27,822
|
|
||
Total current liabilities
|
|
303,005
|
|
|
|
|
186,725
|
|
||
Long-term debt, less current maturities
|
|
2,130,556
|
|
|
|
|
1,414,421
|
|
||
Long-term tax receivable agreement liability
|
|
43,791
|
|
|
|
|
122,351
|
|
||
Other long-term liabilities
|
|
178,689
|
|
|
|
|
76,266
|
|
||
|
|
|
|
|
|
|
||||
Non-controlling interests—redeemable
|
|
299,316
|
|
|
|
|
180,521
|
|
||
Redeemable preferred stock - Series A, 310,000 shares authorized, issued and outstanding, redemption value of $330,806 at December 31, 2017; no shares were authorized, issued or outstanding at December 31, 2016.
|
|
330,806
|
|
|
|
|
—
|
|
||
|
|
|
|
|
|
|
||||
Stockholders' equity:
|
|
|
|
|
|
|
||||
Preferred stock, $0.01 par value, 20,000,000 shares authorized, no shares issued or outstanding
|
|
—
|
|
|
|
|
—
|
|
||
Common stock, $0.01 par value, 300,000,000 shares authorized, 48,687,136 shares issued and outstanding at December 31, 2017; 48,488,616 shares issued and outstanding at December 31, 2016.
|
|
487
|
|
|
|
|
485
|
|
||
Additional paid-in capital
|
|
695,560
|
|
|
|
|
320,543
|
|
||
Retained deficit
|
|
(41,316
|
)
|
|
|
|
(311,351
|
)
|
||
Total Surgery Partners, Inc. stockholders' equity
|
|
654,731
|
|
|
|
|
9,677
|
|
||
Non-controlling interests—non-redeemable
|
|
681,879
|
|
|
|
|
314,997
|
|
||
Total stockholders' equity
|
|
1,336,610
|
|
|
|
|
324,674
|
|
||
Total liabilities and stockholders' equity
|
|
$
|
4,622,773
|
|
|
|
|
$
|
2,304,958
|
|
|
|
Successor
|
|
|
|
Predecessor
|
||||||||||||
|
|
September 1 to
December 31, |
|
|
|
January 1 to
August 31, |
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
|
$
|
592,604
|
|
|
|
|
$
|
748,615
|
|
|
$
|
1,145,438
|
|
|
$
|
959,891
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Salaries and benefits
|
|
175,403
|
|
|
|
|
241,149
|
|
|
357,175
|
|
|
261,685
|
|
||||
Supplies
|
|
161,015
|
|
|
|
|
193,322
|
|
|
269,239
|
|
|
242,083
|
|
||||
Professional and medical fees
|
|
45,061
|
|
|
|
|
57,931
|
|
|
81,185
|
|
|
66,583
|
|
||||
Lease expense
|
|
27,868
|
|
|
|
|
36,503
|
|
|
52,147
|
|
|
44,848
|
|
||||
Other operating expenses
|
|
32,281
|
|
|
|
|
43,267
|
|
|
61,450
|
|
|
54,127
|
|
||||
Cost of revenues
|
|
441,628
|
|
|
|
|
572,172
|
|
|
821,196
|
|
|
669,326
|
|
||||
General and administrative expenses
(1)
|
|
29,153
|
|
|
|
|
46,797
|
|
|
60,246
|
|
|
55,992
|
|
||||
Depreciation and amortization
|
|
21,804
|
|
|
|
|
30,124
|
|
|
39,551
|
|
|
34,545
|
|
||||
Provision for doubtful accounts
|
|
12,455
|
|
|
|
|
16,297
|
|
|
24,212
|
|
|
23,578
|
|
||||
Income from equity investments
|
|
(3,319
|
)
|
|
|
|
(3,148
|
)
|
|
(4,764
|
)
|
|
(3,777
|
)
|
||||
Loss (gain) on disposal or impairment of long-lived assets, net
|
|
5
|
|
|
|
|
1,715
|
|
|
2,355
|
|
|
(2,097
|
)
|
||||
Merger transaction and integration costs
|
|
7,470
|
|
|
|
|
5,584
|
|
|
8,738
|
|
|
17,920
|
|
||||
Loss on debt refinancing
|
|
—
|
|
|
|
|
18,211
|
|
|
11,876
|
|
|
16,102
|
|
||||
Gain on litigation settlements
|
|
(8,740
|
)
|
|
|
|
(3,794
|
)
|
|
(14,101
|
)
|
|
—
|
|
||||
Gain on acquisition escrow release
|
|
(167
|
)
|
|
|
|
(1,000
|
)
|
|
—
|
|
|
—
|
|
||||
Termination of management agreement and IPO costs
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
5,834
|
|
||||
Electronic health records incentive expense (income)
|
|
45
|
|
|
|
|
(305
|
)
|
|
(408
|
)
|
|
(1,761
|
)
|
||||
Other (income) expense
|
|
—
|
|
|
|
|
(2
|
)
|
|
55
|
|
|
(525
|
)
|
||||
Total operating expenses
|
|
500,334
|
|
|
|
|
682,651
|
|
|
948,956
|
|
|
815,137
|
|
||||
Operating income
|
|
92,270
|
|
|
|
|
65,964
|
|
|
196,482
|
|
|
144,754
|
|
||||
Gain on amendment to tax receivable agreement
|
|
1,098
|
|
|
|
|
15,294
|
|
|
—
|
|
|
—
|
|
||||
Tax receivable agreement benefit (expense)
|
|
25,329
|
|
|
|
|
—
|
|
|
(3,733
|
)
|
|
(119,911
|
)
|
||||
Interest expense, net
|
|
(48,740
|
)
|
|
|
|
(68,929
|
)
|
|
(100,571
|
)
|
|
(100,980
|
)
|
||||
Income (loss) before income taxes
|
|
69,957
|
|
|
|
|
12,329
|
|
|
92,178
|
|
|
(76,137
|
)
|
||||
Income tax expense (benefit)
|
|
71,639
|
|
|
|
|
(18,089
|
)
|
|
7,095
|
|
|
(148,982
|
)
|
||||
Net (loss) income
|
|
(1,682
|
)
|
|
|
|
30,418
|
|
|
85,083
|
|
|
72,845
|
|
||||
Less: Net income attributable to non-controlling interests
|
|
(39,634
|
)
|
|
|
|
(42,087
|
)
|
|
(75,630
|
)
|
|
(71,416
|
)
|
||||
Net (loss) income attributable to Surgery Partners, Inc.
|
|
(41,316
|
)
|
|
|
|
(11,669
|
)
|
|
9,453
|
|
|
1,429
|
|
||||
Less: Amounts attributable to participating securities
(2)
|
|
(26,047
|
)
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net (loss) income attributable to common stockholders
|
|
$
|
(67,363
|
)
|
|
|
|
$
|
(11,669
|
)
|
|
$
|
9,453
|
|
|
$
|
1,429
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net (loss) income per share attributable to common stockholders
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
(1.39
|
)
|
|
|
|
$
|
(0.24
|
)
|
|
$
|
0.20
|
|
|
$
|
0.04
|
|
Diluted
(3)
|
|
$
|
(1.39
|
)
|
|
|
|
$
|
(0.24
|
)
|
|
$
|
0.20
|
|
|
$
|
0.04
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
48,319,193
|
|
|
|
|
48,121,404
|
|
|
48,018,944
|
|
|
36,066,233
|
|
||||
Diluted
(3)
|
|
48,319,193
|
|
|
|
|
48,121,404
|
|
|
48,190,738
|
|
|
37,464,387
|
|
|
|
Successor
|
|
|
|
Predecessor
|
||||||||||||
|
|
September 1 to
December 31, |
|
|
|
January 1 to
August 31, |
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net (loss) income
|
|
$
|
(1,682
|
)
|
|
|
|
$
|
30,418
|
|
|
$
|
85,083
|
|
|
$
|
72,845
|
|
Other comprehensive income
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Comprehensive (loss) income
|
|
$
|
(1,682
|
)
|
|
|
|
$
|
30,418
|
|
|
$
|
85,083
|
|
|
$
|
72,845
|
|
Less: Comprehensive income attributable to non-controlling interests
|
|
(39,634
|
)
|
|
|
|
(42,087
|
)
|
|
(75,630
|
)
|
|
(71,416
|
)
|
||||
Comprehensive (loss) income attributable to Surgery Partners, Inc.
|
|
$
|
(41,316
|
)
|
|
|
|
$
|
(11,669
|
)
|
|
$
|
9,453
|
|
|
$
|
1,429
|
|
|
Common Stock
(1)
|
|
Additional
Paid-in Capital |
|
Retained Deficit
|
|
Non-Controlling Interests—
Non-Redeemable
|
|
Total
|
|||||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||||||
Predecessor
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
9,453
|
|
|
57,607
|
|
|
67,060
|
|
|||||
Issuance of restricted stock, net of forfeitures
|
331,626
|
|
|
3
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Equity-based compensation
|
—
|
|
|
—
|
|
|
2,021
|
|
|
—
|
|
|
—
|
|
|
2,021
|
|
|||||
Acquisition and disposal of shares of non-controlling interests, net
|
—
|
|
|
—
|
|
|
2,231
|
|
|
—
|
|
|
4,053
|
|
|
6,284
|
|
|||||
Distributions to non-controlling interests—non-redeemable holders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(48,618
|
)
|
|
(48,618
|
)
|
|||||
Balance as of December 31, 2016
|
48,488,616
|
|
|
$
|
485
|
|
|
$
|
320,543
|
|
|
$
|
(311,351
|
)
|
|
$
|
314,997
|
|
|
$
|
324,674
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net (loss) income
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,669
|
)
|
|
32,472
|
|
|
20,803
|
|
|||||
Issuance of restricted and unrestricted shares
|
355,607
|
|
|
3
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Equity-based compensation
|
—
|
|
|
—
|
|
|
3,697
|
|
|
—
|
|
|
—
|
|
|
3,697
|
|
|||||
Cancellation of restricted shares
|
(33,908
|
)
|
|
—
|
|
|
(790
|
)
|
|
—
|
|
|
—
|
|
|
(790
|
)
|
|||||
Acquisition of NSH
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
172,645
|
|
|
172,645
|
|
|||||
Acquisition and disposal of shares of non-controlling interests, net
|
—
|
|
|
—
|
|
|
3,483
|
|
|
—
|
|
|
(5,629
|
)
|
|
(2,146
|
)
|
|||||
Distributions to non-controlling interests—non-redeemable holders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(38,875
|
)
|
|
(38,875
|
)
|
|||||
Balance as of August 31, 2017
|
48,810,315
|
|
|
$
|
488
|
|
|
$
|
326,930
|
|
|
$
|
(323,020
|
)
|
|
$
|
475,610
|
|
|
$
|
480,008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Common Stock
(1)
|
|
Additional
Paid-in Capital
|
|
Retained Deficit
|
|
Non-Controlling Interests—
Non-Redeemable
|
|
Total
|
|||||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||||||
Successor
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance as of September 1, 2017
|
48,810,315
|
|
|
$
|
488
|
|
|
$
|
720,118
|
|
|
$
|
—
|
|
|
$
|
684,480
|
|
|
$
|
1,405,086
|
|
Net (loss) income
|
—
|
|
|
—
|
|
|
—
|
|
|
(41,316
|
)
|
|
26,703
|
|
|
(14,613
|
)
|
|||||
Issuance of restricted and unrestricted shares
|
112,107
|
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Equity-based compensation
|
—
|
|
|
—
|
|
|
1,887
|
|
|
—
|
|
|
—
|
|
|
1,887
|
|
|||||
Cancellation of restricted shares
|
(54,622
|
)
|
|
—
|
|
|
(585
|
)
|
|
—
|
|
|
—
|
|
|
(585
|
)
|
|||||
Preferred dividends
|
—
|
|
|
—
|
|
|
(10,481
|
)
|
|
—
|
|
|
—
|
|
|
(10,481
|
)
|
|||||
Mark to redemption adjustment
|
—
|
|
|
—
|
|
|
(15,566
|
)
|
|
—
|
|
|
—
|
|
|
(15,566
|
)
|
|||||
Reallocation in application of pushdown accounting
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,248
|
)
|
|
(21,248
|
)
|
|||||
Acquisition and disposal of shares of non-controlling interests, net
|
—
|
|
|
—
|
|
|
2,195
|
|
|
—
|
|
|
17,206
|
|
|
19,401
|
|
|||||
Distributions to non-controlling interests—non-redeemable holders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(25,262
|
)
|
|
(25,262
|
)
|
|||||
Repurchase of shares
|
(180,664
|
)
|
|
(2
|
)
|
|
(2,007
|
)
|
|
—
|
|
|
—
|
|
|
(2,009
|
)
|
|||||
Balance as of December 31, 2017
|
48,687,136
|
|
|
$
|
487
|
|
|
$
|
695,560
|
|
|
$
|
(41,316
|
)
|
|
$
|
681,879
|
|
|
$
|
1,336,610
|
|
|
|
Successor
|
|
|
|
Predecessor
|
||||||||||||
|
|
September 1 to
December 31, |
|
|
|
January 1 to
August 31, |
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net (loss) income
|
|
$
|
(1,682
|
)
|
|
|
|
$
|
30,418
|
|
|
$
|
85,083
|
|
|
$
|
72,845
|
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
|
21,804
|
|
|
|
|
30,124
|
|
|
39,551
|
|
|
34,545
|
|
||||
Amortization of debt issuance costs, discounts and premium
|
|
(559
|
)
|
|
|
|
5,091
|
|
|
7,199
|
|
|
6,263
|
|
||||
Amortization of unfavorable lease liability
|
|
(221
|
)
|
|
|
|
(217
|
)
|
|
(431
|
)
|
|
(431
|
)
|
||||
Equity-based compensation
|
|
1,887
|
|
|
|
|
3,697
|
|
|
2,021
|
|
|
7,502
|
|
||||
Loss (gain) on disposal or impairment of long-lived assets, net
|
|
5
|
|
|
|
|
1,715
|
|
|
2,355
|
|
|
(2,097
|
)
|
||||
Gain on legal settlements
|
|
(8,740
|
)
|
|
|
|
—
|
|
|
(14,101
|
)
|
|
—
|
|
||||
Loss on debt refinancing
|
|
—
|
|
|
|
|
18,211
|
|
|
11,876
|
|
|
16,102
|
|
||||
Gain on amendment to tax receivable agreement
|
|
(1,098
|
)
|
|
|
|
(15,294
|
)
|
|
—
|
|
|
—
|
|
||||
Tax receivable agreement (benefit) expense
|
|
(25,329
|
)
|
|
|
|
—
|
|
|
3,733
|
|
|
119,911
|
|
||||
Deferred income taxes
|
|
71,031
|
|
|
|
|
(18,703
|
)
|
|
6,882
|
|
|
(149,891
|
)
|
||||
Interest on contingent consideration obligation
|
|
—
|
|
|
|
|
—
|
|
|
1,124
|
|
|
1,041
|
|
||||
Provision for doubtful accounts
|
|
12,455
|
|
|
|
|
16,297
|
|
|
24,212
|
|
|
23,578
|
|
||||
Income from equity investments, net of distributions received
|
|
678
|
|
|
|
|
489
|
|
|
(846
|
)
|
|
(543
|
)
|
||||
Changes in operating assets and liabilities, net of acquisitions and divestitures:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Accounts receivable
|
|
(31,500
|
)
|
|
|
|
8,837
|
|
|
(60,622
|
)
|
|
(48,783
|
)
|
||||
Other operating assets and liabilities
|
|
14,494
|
|
|
|
|
(12,947
|
)
|
|
17,203
|
|
|
4,439
|
|
||||
Net cash provided by operating activities
|
|
53,225
|
|
|
|
|
67,718
|
|
|
125,239
|
|
|
84,481
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Purchases of property and equipment, net
|
|
(10,827
|
)
|
|
|
|
(18,773
|
)
|
|
(39,109
|
)
|
|
(33,439
|
)
|
||||
Payments for acquisitions, net of cash acquired
|
|
(29,249
|
)
|
|
|
|
(725,853
|
)
|
|
(146,405
|
)
|
|
(112,596
|
)
|
||||
Proceeds from divestitures
|
|
1,183
|
|
|
|
|
70
|
|
|
765
|
|
|
11,193
|
|
||||
Net cash used in investing activities
|
|
(38,893
|
)
|
|
|
|
(744,556
|
)
|
|
(184,749
|
)
|
|
(134,842
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Proceeds from initial public offering, net of offering costs
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
250,979
|
|
||||
Principal payments on long-term debt
|
|
(18,629
|
)
|
|
|
|
(1,164,237
|
)
|
|
(473,437
|
)
|
|
(328,329
|
)
|
||||
Borrowings of long-term debt
|
|
409
|
|
|
|
|
1,805,966
|
|
|
650,707
|
|
|
196,366
|
|
||||
Payments of debt issuance costs
|
|
(4
|
)
|
|
|
|
(58,591
|
)
|
|
(14,296
|
)
|
|
—
|
|
||||
Penalty on prepayment of debt
|
|
—
|
|
|
|
|
—
|
|
|
(4,900
|
)
|
|
—
|
|
||||
Payment of premium of debt extinguishment
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
(7,305
|
)
|
||||
Proceeds from preferred stock issuance
|
|
—
|
|
|
|
|
310,000
|
|
|
—
|
|
|
—
|
|
||||
Payments of stock issuance costs
|
|
—
|
|
|
|
|
(18,347
|
)
|
|
—
|
|
|
—
|
|
||||
Payments of preferred dividends
|
|
(1,316
|
)
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Distributions to non-controlling interest holders
|
|
(33,490
|
)
|
|
|
|
(50,343
|
)
|
|
(65,778
|
)
|
|
(69,720
|
)
|
||||
Proceeds from (payments related to) ownership transactions with non-controlling interest holders
|
|
998
|
|
|
|
|
(1,518
|
)
|
|
(20,096
|
)
|
|
(12,175
|
)
|
||||
Repurchase of shares
|
|
(2,009
|
)
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Financing lease obligations
|
|
1,007
|
|
|
|
|
(796
|
)
|
|
(924
|
)
|
|
3,558
|
|
||||
Other financing activities
|
|
(590
|
)
|
|
|
|
(789
|
)
|
|
—
|
|
|
|
|||||
Net cash (used in) provided by financing activities
|
|
(53,624
|
)
|
|
|
|
821,345
|
|
|
71,276
|
|
|
33,374
|
|
||||
Net (decrease) increase in cash and cash equivalents
|
|
(39,292
|
)
|
|
|
|
144,507
|
|
|
11,766
|
|
|
(16,987
|
)
|
||||
Cash and cash equivalents at beginning of period
|
|
214,206
|
|
|
|
|
69,699
|
|
|
57,933
|
|
|
74,920
|
|
||||
Cash and cash equivalents at end of period
|
|
$
|
174,914
|
|
|
|
|
$
|
214,206
|
|
|
$
|
69,699
|
|
|
$
|
57,933
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Supplemental cash flow information:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest paid, net of interest income received
|
|
40,872
|
|
|
|
|
68,646
|
|
|
79,262
|
|
|
96,799
|
|
||||
Cash paid for income taxes
|
|
485
|
|
|
|
|
598
|
|
|
661
|
|
|
1,093
|
|
||||
Non-cash purchases of property and equipment under capital leases and financing activities
|
|
14,872
|
|
|
|
|
8,469
|
|
|
9,226
|
|
|
5,443
|
|
Predecessor
|
|
|
||
Balance at December 31, 2015
|
|
$
|
183,439
|
|
Net income attributable to non-controlling interests—redeemable
|
|
18,023
|
|
|
Acquisition and disposal of shares of non-controlling interests, net—redeemable
|
|
(3,781
|
)
|
|
Distributions to non-controlling interest —redeemable holders
|
|
(17,160
|
)
|
|
Balance at December 31, 2016
|
|
180,521
|
|
|
Net income attributable to non-controlling interests—redeemable
|
|
9,615
|
|
|
Acquisition and disposal of shares of non-controlling interests, net—redeemable
|
|
(3,323
|
)
|
|
Distributions to non-controlling interest —redeemable holders
|
|
(11,468
|
)
|
|
Acquisition of NSH
|
|
153,320
|
|
|
Balance at August 31, 2017
|
|
$
|
328,665
|
|
|
|
|
||
|
|
|
||
|
|
|
||
Successor
|
|
|
||
Balance at September 1, 2017
|
|
$
|
271,001
|
|
Net income attributable to non-controlling interests—redeemable
|
|
12,931
|
|
|
Acquisition and disposal of shares of non-controlling interests, net—redeemable
|
|
819
|
|
|
Distributions to non-controlling interest —redeemable holders
|
|
(8,228
|
)
|
|
Reallocation in application of pushdown accounting
|
|
21,248
|
|
|
Purchase price adjustments
|
|
1,545
|
|
|
Balance at December 31, 2017
|
|
$
|
299,316
|
|
|
|
Successor
|
|
|
|
Predecessor
|
||||||||||||
|
|
December 31, 2017
|
|
|
|
December 31, 2016
|
||||||||||||
|
|
Carrying
Amount
|
|
Fair Value
|
|
|
|
Carrying
Amount
|
|
Fair Value
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
2014 Revolver Loan
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
85,000
|
|
|
$
|
85,000
|
|
2014 First Lien Credit Agreement, net of debt issuance costs and discount
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
911,784
|
|
|
$
|
917,528
|
|
2017 Senior Secured Credit Facilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Revolver
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Term Loan
|
|
$
|
1,280,532
|
|
|
$
|
1,267,189
|
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Senior Unsecured Notes due 2021
(1)
|
|
$
|
409,235
|
|
|
$
|
422,535
|
|
|
|
|
$
|
387,942
|
|
|
$
|
412,189
|
|
Senior Unsecured Notes due 2025
|
|
$
|
370,000
|
|
|
$
|
346,413
|
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Successor
|
|
|
|
Predecessor
|
||||||||
|
|
September 1 to
December 31, |
|
|
|
January 1 to
August 31, |
|
Year Ended December 31,
|
||||||
|
|
2017
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||
Patient service revenues:
|
|
|
|
|
|
|
|
|
|
|
||||
Surgical facilities revenues
|
|
94.3
|
%
|
|
|
|
91.4
|
%
|
|
90.3
|
%
|
|
91.6
|
%
|
Ancillary services revenues
|
|
4.2
|
%
|
|
|
|
7.0
|
%
|
|
7.9
|
%
|
|
6.4
|
%
|
|
|
98.5
|
%
|
|
|
|
98.4
|
%
|
|
98.2
|
%
|
|
98.0
|
%
|
Other service revenues:
|
|
|
|
|
|
|
|
|
|
|
||||
Optical services revenues
|
|
0.6
|
%
|
|
|
|
1.0
|
%
|
|
1.1
|
%
|
|
1.5
|
%
|
Other
|
|
0.9
|
%
|
|
|
|
0.6
|
%
|
|
0.7
|
%
|
|
0.5
|
%
|
|
|
1.5
|
%
|
|
|
|
1.6
|
%
|
|
1.8
|
%
|
|
2.0
|
%
|
Total revenues
|
|
100.0
|
%
|
|
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
Successor
|
|
|
|
Predecessor
|
||||||||||||||||||||||||
|
|
September 1 to
December 31, |
|
|
|
January 1 to
August 31, |
|
Year Ended December 31,
|
||||||||||||||||||||||
|
|
2017
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||||||||||
|
|
Amount
|
|
%
|
|
|
|
Amount
|
|
%
|
|
Amount
|
|
%
|
|
Amount
|
|
%
|
||||||||||||
Patient service revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Private insurance
|
|
$
|
347,801
|
|
|
59.6
|
%
|
|
|
|
$
|
360,092
|
|
|
48.9
|
%
|
|
$
|
579,662
|
|
|
51.5
|
%
|
|
$
|
516,739
|
|
|
55.0
|
%
|
Government
|
|
196,926
|
|
|
33.7
|
%
|
|
|
|
308,993
|
|
|
42.0
|
%
|
|
448,953
|
|
|
39.9
|
%
|
|
359,471
|
|
|
38.2
|
%
|
||||
Self-pay
|
|
15,233
|
|
|
2.6
|
%
|
|
|
|
15,949
|
|
|
2.2
|
%
|
|
19,817
|
|
|
1.8
|
%
|
|
16,190
|
|
|
1.7
|
%
|
||||
Other
(1)
|
|
23,843
|
|
|
4.1
|
%
|
|
|
|
51,374
|
|
|
6.9
|
%
|
|
76,172
|
|
|
6.8
|
%
|
|
48,311
|
|
|
5.1
|
%
|
||||
Total patient service revenues
|
|
$
|
583,803
|
|
|
100.0
|
%
|
|
|
|
$
|
736,408
|
|
|
100.0
|
%
|
|
$
|
1,124,604
|
|
|
100.0
|
%
|
|
$
|
940,711
|
|
|
100.0
|
%
|
Other service revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Optical service revenues
|
|
$
|
3,486
|
|
|
|
|
|
|
$
|
7,629
|
|
|
|
|
|
$
|
12,505
|
|
|
|
|
|
$
|
14,572
|
|
|
|
||
Other revenues
|
|
5,315
|
|
|
|
|
|
|
4,578
|
|
|
|
|
|
8,329
|
|
|
|
|
|
4,608
|
|
|
|
||||||
Total net revenues
|
|
$
|
592,604
|
|
|
|
|
|
|
$
|
748,615
|
|
|
|
|
$
|
1,145,438
|
|
|
|
|
$
|
959,891
|
|
|
|
|
|
Successor
|
|
|
|
Predecessor
|
||||
|
|
December 31,
2017 |
|
|
|
December 31,
2016 |
||||
|
|
|
|
|
|
|
||||
Prepaid expenses
|
|
$
|
16,835
|
|
|
|
|
$
|
11,158
|
|
Receivables - optical product purchasing organization
|
|
7,563
|
|
|
|
|
7,042
|
|
||
Acquisition escrow deposit
|
|
3,809
|
|
|
|
|
10,871
|
|
||
Insurance recoveries
|
|
2,828
|
|
|
|
|
2,476
|
|
||
Other
|
|
24,302
|
|
|
|
|
11,338
|
|
||
Total
|
|
$
|
55,337
|
|
|
|
|
$
|
42,885
|
|
|
|
Successor
|
|
|
|
Predecessor
|
||||
|
|
December 31,
2017 |
|
|
|
December 31,
2016 |
||||
|
|
|
|
|
|
|
||||
Acquisition escrow deposit
|
|
$
|
19,600
|
|
|
|
|
$
|
—
|
|
Insurance recoveries
|
|
10,018
|
|
|
|
|
6,835
|
|
||
Notes receivable
|
|
2,263
|
|
|
|
|
716
|
|
||
Deposits
|
|
3,151
|
|
|
|
|
4,196
|
|
||
Other
|
|
13,318
|
|
|
|
|
4,688
|
|
||
Total
|
|
$
|
48,350
|
|
|
|
|
$
|
16,435
|
|
|
|
Successor
|
|
|
|
Predecessor
|
||||
|
|
December 31,
2017 |
|
|
|
December 31,
2016 |
||||
|
|
|
|
|
|
|
||||
Interest payable
|
|
$
|
20,537
|
|
|
|
|
$
|
19,206
|
|
Amounts due to patients and payors
|
|
18,096
|
|
|
|
|
12,221
|
|
||
Insurance liabilities
|
|
9,873
|
|
|
|
|
6,625
|
|
||
Current taxes payable
|
|
4,912
|
|
|
|
|
2,622
|
|
||
Acquisition escrow liability
|
|
3,809
|
|
|
|
|
10,871
|
|
||
Accrued expenses and other
|
|
52,717
|
|
|
|
|
28,319
|
|
||
Total
|
|
$
|
109,944
|
|
|
|
|
$
|
79,864
|
|
|
|
Successor
|
|
|
|
Predecessor
|
||||
|
|
December 31,
2017 |
|
|
|
December 31,
2016 |
||||
|
|
|
|
|
|
|
||||
Facility lease obligations
|
|
$
|
121,627
|
|
|
|
|
$
|
52,653
|
|
Acquisition escrow liability
|
|
19,600
|
|
|
|
|
—
|
|
||
Medical malpractice liability
|
|
16,450
|
|
|
|
|
10,453
|
|
||
Unfavorable lease liability
|
|
11,889
|
|
|
|
|
1,671
|
|
||
Other
|
|
9,123
|
|
|
|
|
11,489
|
|
||
Total
|
|
$
|
178,689
|
|
|
|
|
$
|
76,266
|
|
Cash consideration
|
$
|
762,850
|
|
Fair value of non-controlling interests
|
325,965
|
|
|
Aggregate fair value of acquisition
|
1,088,815
|
|
|
Net assets acquired:
|
|
||
Cash and cash equivalents
|
51,159
|
|
|
Accounts receivable
|
71,901
|
|
|
Inventories
|
14,986
|
|
|
Prepaid expenses and other current assets
|
18,397
|
|
|
Property and equipment
|
174,499
|
|
|
Intangible assets
|
27,746
|
|
|
Goodwill
|
870,241
|
|
|
Investments in and advances to affiliates
|
29,737
|
|
|
Long-term deferred tax assets
|
17,279
|
|
|
Other long-term assets
|
27,229
|
|
|
Accounts payable
|
(29,652
|
)
|
|
Accrued payroll and benefits
|
(28,755
|
)
|
|
Other current liabilities
|
(21,287
|
)
|
|
Current maturities of long-term debt
|
(16,416
|
)
|
|
Long-term debt, less current maturities
|
(42,770
|
)
|
|
Other long-term liabilities
|
(75,479
|
)
|
|
Total fair value of net assets acquired
|
$
|
1,088,815
|
|
|
|
Successor
|
|
|
|
Predecessor
|
||||||||
|
|
September 1 to
December 31, |
|
|
|
January 1 to
August 31, |
|
Year Ended December 31,
|
||||||
|
|
2017
|
|
|
|
2017
|
|
2016
|
||||||
|
|
|
|
|
|
|
|
|
||||||
Net revenues
|
|
$
|
592,604
|
|
|
|
|
$
|
1,122,326
|
|
|
$
|
1,679,254
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income
|
|
4,477
|
|
|
|
|
63,269
|
|
|
132,699
|
|
|||
Less: Net income attributable to non-controlling interests
|
|
(39,634
|
)
|
|
|
|
(65,122
|
)
|
|
(112,123
|
)
|
|||
Net (loss) income attributable to Surgery Partners, Inc.
|
|
$
|
(35,157
|
)
|
|
|
|
$
|
(1,853
|
)
|
|
$
|
20,576
|
|
Equity attributable to Surgery Partners, Inc.
|
$
|
720,606
|
|
Redeemable preferred stock
|
310,000
|
|
|
Fair value of non-controlling interests
|
957,027
|
|
|
Aggregate fair value
|
1,987,633
|
|
|
Net assets:
|
|
||
Cash and cash equivalents
|
214,206
|
|
|
Accounts receivable
|
253,173
|
|
|
Inventories
|
44,310
|
|
|
Prepaid expenses and other current assets
|
61,475
|
|
|
Property and equipment
|
380,085
|
|
|
Intangible assets
|
60,104
|
|
|
Goodwill
|
3,299,911
|
|
|
Investments in and advances to affiliates
|
74,722
|
|
|
Restricted invested assets
|
315
|
|
|
Long-term deferred tax asset
|
204,408
|
|
|
Other long-term assets
|
49,681
|
|
|
Accounts payable
|
(64,921
|
)
|
|
Accrued payroll and benefits
|
(54,437
|
)
|
|
Other current liabilities
|
(94,740
|
)
|
|
Current maturities of long-term debt
|
(49,942
|
)
|
|
Long-term debt, less current maturities
|
(2,142,375
|
)
|
|
Long-term tax receivable agreement liability
|
(78,498
|
)
|
|
Other long-term liabilities
|
(169,844
|
)
|
|
Total fair value of net assets
|
$
|
1,987,633
|
|
|
Successor
|
|
|
|
Predecessor
|
||||
|
September 1 to
December 31, |
|
|
|
January 1 to
August 31, |
||||
|
2017
|
|
|
|
2017
|
||||
|
|
|
|
|
|
||||
Cash consideration
|
$
|
29,448
|
|
|
|
|
$
|
14,163
|
|
Fair value of non-controlling interests
|
21,893
|
|
|
|
|
105
|
|
||
Aggregate fair value of acquisitions
|
51,341
|
|
|
|
|
14,268
|
|
||
Net assets acquired:
|
|
|
|
|
|
||||
Current Assets
|
2,285
|
|
|
|
|
866
|
|
||
Property and equipment
|
248
|
|
|
|
|
696
|
|
||
Intangible assets
|
41
|
|
|
|
|
634
|
|
||
Goodwill
|
49,317
|
|
|
|
|
12,545
|
|
||
Current liabilities
|
(550
|
)
|
|
|
|
(287
|
)
|
||
Long-term debt
|
—
|
|
|
|
|
(186
|
)
|
||
Total fair value of net assets acquired
|
$
|
51,341
|
|
|
|
|
$
|
14,268
|
|
Cash consideration
|
$
|
135,061
|
|
Fair value of non-controlling interests
|
27,164
|
|
|
Aggregate fair value of acquisitions
|
162,225
|
|
|
Net assets acquired:
|
|
||
Current assets
|
11,383
|
|
|
Property and equipment
|
3,921
|
|
|
Intangible assets
|
4,475
|
|
|
Goodwill
|
148,181
|
|
|
Other long-term assets
|
56
|
|
|
Current liabilities
|
(5,422
|
)
|
|
Long-term liabilities
|
(369
|
)
|
|
Total fair value of net assets acquired
|
$
|
162,225
|
|
|
|
Successor
|
|
|
|
Predecessor
|
||||
|
|
December 31,
2017 |
|
|
|
December 31,
2016 |
||||
|
|
|
|
|
|
|
||||
Land
|
|
$
|
19,561
|
|
|
|
|
$
|
8,082
|
|
Buildings and improvements
|
|
188,571
|
|
|
|
|
118,172
|
|
||
Furniture and equipment
|
|
20,813
|
|
|
|
|
14,670
|
|
||
Computer and software
|
|
28,578
|
|
|
|
|
29,902
|
|
||
Medical equipment
|
|
138,112
|
|
|
|
|
117,418
|
|
||
Construction in progress
|
|
22,581
|
|
|
|
|
2,396
|
|
||
Property and equipment, at cost
|
|
418,216
|
|
|
|
|
290,640
|
|
||
Less: Accumulated depreciation
|
|
(19,680
|
)
|
|
|
|
(86,387
|
)
|
||
Property and equipment, net
|
|
$
|
398,536
|
|
|
|
|
$
|
204,253
|
|
Predecessor
|
|
|
||
Balance at December 31, 2015
|
|
$
|
1,407,927
|
|
Acquisitions
|
|
147,895
|
|
|
Divestitures
|
|
(552
|
)
|
|
Purchase price adjustments
|
|
(66
|
)
|
|
Balance at December 31, 2016
|
|
$
|
1,555,204
|
|
Acquisitions
|
|
858,323
|
|
|
Divestitures
|
|
(175
|
)
|
|
Purchase price adjustments
|
|
1,220
|
|
|
Balance at August 31, 2017
|
|
$
|
2,414,572
|
|
|
|
|
||
|
|
|
||
|
|
|
||
Successor
|
|
|
||
Balance at September 1, 2017
|
|
$
|
3,269,225
|
|
Acquisitions
|
|
49,317
|
|
|
Divestitures
|
|
(1,957
|
)
|
|
Purchase price adjustments
|
|
30,253
|
|
|
Balance at December 31, 2017
|
|
$
|
3,346,838
|
|
|
|
Successor
|
|
|
|
Predecessor
|
||||||||||||||||||||
|
|
December 31, 2017
|
|
|
|
December 31, 2016
|
||||||||||||||||||||
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net
|
|
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Finite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Management rights agreements
|
|
$
|
42,600
|
|
|
$
|
(1,058
|
)
|
|
$
|
41,542
|
|
|
|
|
$
|
24,751
|
|
|
$
|
(3,461
|
)
|
|
$
|
21,290
|
|
Non-compete agreements
|
|
4,874
|
|
|
(715
|
)
|
|
4,159
|
|
|
|
|
24,673
|
|
|
(8,216
|
)
|
|
16,457
|
|
||||||
Physician income guarantees
|
|
878
|
|
|
(227
|
)
|
|
651
|
|
|
|
|
1,901
|
|
|
(1,088
|
)
|
|
813
|
|
||||||
Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
8,815
|
|
|
(3,374
|
)
|
|
5,441
|
|
||||||
Total finite-lived intangible assets
|
|
48,352
|
|
|
(2,000
|
)
|
|
46,352
|
|
|
|
|
60,140
|
|
|
(16,139
|
)
|
|
44,001
|
|
||||||
Indefinite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Management rights agreements
|
|
5,900
|
|
|
—
|
|
|
5,900
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Certificates of need
|
|
5,548
|
|
|
—
|
|
|
5,548
|
|
|
|
|
3,780
|
|
|
—
|
|
|
3,780
|
|
||||||
Medicare licenses
|
|
1,108
|
|
|
—
|
|
|
1,108
|
|
|
|
|
242
|
|
|
—
|
|
|
242
|
|
||||||
Total intangible assets
|
|
$
|
60,908
|
|
|
$
|
(2,000
|
)
|
|
$
|
58,908
|
|
|
|
|
$
|
64,162
|
|
|
$
|
(16,139
|
)
|
|
$
|
48,023
|
|
Predecessor
|
|
|
||
Balance at December 31, 2015
|
|
$
|
53,568
|
|
Additions
|
|
4,754
|
|
|
Disposals
|
|
(135
|
)
|
|
Recruitment expense
|
|
(609
|
)
|
|
Amortization
|
|
(9,555
|
)
|
|
Balance at December 31, 2016
|
|
$
|
48,023
|
|
Additions
|
|
28,312
|
|
|
Recruitment expense
|
|
(380
|
)
|
|
Amortization
|
|
(6,040
|
)
|
|
Balance at August 31, 2017
|
|
$
|
69,915
|
|
|
|
|
||
|
|
|
||
|
|
|
||
Successor
|
|
|
||
Balance at September 1, 2017
|
|
$
|
56,750
|
|
Additions
|
|
474
|
|
|
Disposals
|
|
(140
|
)
|
|
Purchase price adjustments
|
|
3,873
|
|
|
Recruitment expense
|
|
(227
|
)
|
|
Amortization
|
|
(1,822
|
)
|
|
Balance at December 31, 2017
|
|
$
|
58,908
|
|
2018
|
|
$
|
4,966
|
|
2019
|
|
4,576
|
|
|
2020
|
|
4,172
|
|
|
2021
|
|
3,730
|
|
|
2022
|
|
2,874
|
|
|
Thereafter
|
|
26,034
|
|
|
Total
|
|
$
|
46,352
|
|
|
|
Successor
|
|
|
|
Predecessor
|
||||
|
|
December 31,
2017 |
|
|
|
December 31,
2016 |
||||
|
|
|
|
|
|
|
||||
2014 Revolver Loan
|
|
$
|
—
|
|
|
|
|
$
|
85,000
|
|
2014 First Lien Credit Agreement
|
|
—
|
|
|
|
|
932,000
|
|
||
2017 Senior Secured Credit Facilities:
|
|
|
|
|
|
|
||||
Revolver
|
|
—
|
|
|
|
|
—
|
|
||
Term Loan
(1)
|
|
1,280,532
|
|
|
|
|
—
|
|
||
Senior Unsecured Notes due 2021
(2)
|
|
409,235
|
|
|
|
|
400,000
|
|
||
Senior Unsecured Notes due 2025
|
|
370,000
|
|
|
|
|
—
|
|
||
Subordinated Notes
|
|
—
|
|
|
|
|
1,000
|
|
||
Notes payable and secured loans
|
|
101,921
|
|
|
|
|
42,521
|
|
||
Capital lease obligations
|
|
27,594
|
|
|
|
|
13,996
|
|
||
Less: unamortized debt issuance costs and original issue discount
|
|
—
|
|
|
|
|
(32,274
|
)
|
||
Total debt
|
|
2,189,282
|
|
|
|
|
1,442,243
|
|
||
Less: Current maturities
|
|
58,726
|
|
|
|
|
27,822
|
|
||
Total long-term debt
|
|
$
|
2,130,556
|
|
|
|
|
$
|
1,414,421
|
|
April 15, 2018 to April 14, 2019
|
106.656
|
%
|
April 15, 2019 to April 14, 2020
|
104.438
|
%
|
April 15, 2020 and thereafter
|
100.000
|
%
|
July 1, 2020 to June 30, 2021
|
103.375
|
%
|
July 1, 2021 to June 30, 2022
|
101.688
|
%
|
July 1, 2022 and thereafter
|
100.000
|
%
|
2018
|
|
$
|
58,726
|
|
2019
|
|
36,857
|
|
|
2020
|
|
1,277,253
|
|
|
2021
|
|
411,748
|
|
|
2022
|
|
8,110
|
|
|
Thereafter
|
|
393,597
|
|
|
Total debt
|
|
$
|
2,186,291
|
|
|
|
Operating Leases
|
|
Capital Leases
|
||||
|
|
|
|
|
||||
2018
|
|
$
|
67,513
|
|
|
$
|
9,100
|
|
2019
|
|
67,136
|
|
|
7,404
|
|
||
2020
|
|
62,735
|
|
|
5,020
|
|
||
2021
|
|
56,558
|
|
|
3,505
|
|
||
2022
|
|
52,582
|
|
|
1,986
|
|
||
Thereafter
|
|
258,192
|
|
|
6,299
|
|
||
Total minimum payments
|
|
$
|
564,716
|
|
|
33,314
|
|
|
Less: imputed interest
|
|
|
|
(5,720
|
)
|
|||
Capital lease obligations
|
|
|
|
$
|
27,594
|
|
Successor
|
|
|
||
Balance at September 1, 2017
|
|
$
|
310,000
|
|
Dividends accrued
|
|
10,481
|
|
|
Cash dividends declared
|
|
(5,241
|
)
|
|
Mark to redemption adjustment
|
|
15,566
|
|
|
Balance at December 31, 2017
|
|
$
|
330,806
|
|
|
|
Successor
|
|
|
|
Predecessor
|
||||||||||||
|
|
September 1 to
December 31, |
|
|
|
January 1 to
August 31, |
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net (loss) income attributable to Surgery Partners, Inc.
|
|
$
|
(41,316
|
)
|
|
|
|
$
|
(11,669
|
)
|
|
$
|
9,453
|
|
|
$
|
1,429
|
|
Less: amounts allocated to participating securities
(1)
|
|
10,481
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Less: mark to redemption adjustment
|
|
15,566
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net (loss) income attributable to common stockholders
|
|
$
|
(67,363
|
)
|
|
|
|
$
|
(11,669
|
)
|
|
$
|
9,453
|
|
|
$
|
1,429
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding- basic
|
|
48,319,193
|
|
|
|
|
48,121,404
|
|
|
48,018,944
|
|
|
36,066,233
|
|
||||
Effect of dilutive securities
(2)
|
|
—
|
|
|
|
|
—
|
|
|
171,794
|
|
|
1,398,154
|
|
||||
Weighted average shares outstanding- diluted
|
|
48,319,193
|
|
|
|
|
48,121,404
|
|
|
48,190,738
|
|
|
37,464,387
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
(1.39
|
)
|
|
|
|
$
|
(0.24
|
)
|
|
$
|
0.20
|
|
|
$
|
0.04
|
|
Diluted
(2)
|
|
$
|
(1.39
|
)
|
|
|
|
$
|
(0.24
|
)
|
|
$
|
0.20
|
|
|
$
|
0.04
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Securities outstanding not included in the computation of diluted (loss) earnings per share as their effect is antidilutive:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Stock options
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Restricted shares
|
|
62,850
|
|
|
|
|
105,944
|
|
|
—
|
|
|
—
|
|
||||
Convertible preferred stock
|
|
—
|
|
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
Successor
|
|
|
|
Predecessor
|
||||||||||||
|
|
September 1 to
December 31, |
|
|
|
January 1 to
August 31, |
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Current:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Federal
|
|
$
|
(111
|
)
|
|
|
|
$
|
—
|
|
|
$
|
(31
|
)
|
|
$
|
—
|
|
State
|
|
990
|
|
|
|
|
614
|
|
|
244
|
|
|
909
|
|
||||
Deferred:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Federal
|
|
77,472
|
|
|
|
|
(17,288
|
)
|
|
7,326
|
|
|
(132,311
|
)
|
||||
State
|
|
(6,712
|
)
|
|
|
|
(1,415
|
)
|
|
(444
|
)
|
|
(17,580
|
)
|
||||
Total income tax expense (benefit)
|
|
$
|
71,639
|
|
|
|
|
$
|
(18,089
|
)
|
|
$
|
7,095
|
|
|
$
|
(148,982
|
)
|
|
|
Successor
|
|
|
|
Predecessor
|
||||||||||||
|
|
September 1 to
December 31, |
|
|
|
January 1 to
August 31, |
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Tax expense (benefit) at U.S.federal statutory rate
|
|
$
|
24,485
|
|
|
|
|
$
|
4,315
|
|
|
$
|
32,263
|
|
|
$
|
(26,648
|
)
|
State income tax, net of U.S. federal tax benefit
|
|
1,685
|
|
|
|
|
(456
|
)
|
|
(86
|
)
|
|
1,059
|
|
||||
Change in valuation allowance
|
|
529
|
|
|
|
|
1,324
|
|
|
354
|
|
|
(137,721
|
)
|
||||
Net income attributable to non-controlling interests
|
|
(13,872
|
)
|
|
|
|
(14,731
|
)
|
|
(26,470
|
)
|
|
(24,996
|
)
|
||||
Changes in measurement of uncertain tax positions
|
|
(191
|
)
|
|
|
|
20
|
|
|
(262
|
)
|
|
(10
|
)
|
||||
Stock option compensation
|
|
306
|
|
|
|
|
37
|
|
|
(200
|
)
|
|
—
|
|
||||
Differences related to divested facilities
|
|
(429
|
)
|
|
|
|
(1,708
|
)
|
|
—
|
|
|
—
|
|
||||
Nondeductible transaction costs
|
|
2,058
|
|
|
|
|
(977
|
)
|
|
—
|
|
|
3,442
|
|
||||
Tax return reconciling differences
|
|
—
|
|
|
|
|
(316
|
)
|
|
1,635
|
|
|
(1,574
|
)
|
||||
Change in effective tax rate
|
|
64,343
|
|
|
|
|
(825
|
)
|
|
—
|
|
|
(2,143
|
)
|
||||
TRA liability
|
|
(7,404
|
)
|
|
|
|
(4,782
|
)
|
|
(327
|
)
|
|
39,428
|
|
||||
Other
|
|
129
|
|
|
|
|
10
|
|
|
188
|
|
|
181
|
|
||||
Total income tax expense (benefit)
|
|
$
|
71,639
|
|
|
|
|
$
|
(18,089
|
)
|
|
$
|
7,095
|
|
|
$
|
(148,982
|
)
|
|
|
Successor
|
|
|
|
Predecessor
|
||||
|
|
December 31,
2017 |
|
|
|
December 31,
2016 |
||||
|
|
|
|
|
|
|
||||
Deferred tax assets:
|
|
|
|
|
|
|
||||
Medical malpractice liability
|
|
$
|
3,236
|
|
|
|
|
$
|
4,194
|
|
Accrued vacation and incentive compensation
|
|
2,125
|
|
|
|
|
1,112
|
|
||
Net operating loss carryforwards
|
|
137,794
|
|
|
|
|
158,796
|
|
||
Allowance for bad debts
|
|
2,545
|
|
|
|
|
8,343
|
|
||
Capital loss carryforwards
|
|
3,024
|
|
|
|
|
2,785
|
|
||
Deferred rent
|
|
—
|
|
|
|
|
1,371
|
|
||
Depreciation on property and equipment
|
|
—
|
|
|
|
|
530
|
|
||
Deferred financing costs
|
|
17,004
|
|
|
|
|
—
|
|
||
TRA liability
|
|
1,042
|
|
|
|
|
4,542
|
|
||
Other deferred assets
|
|
4,961
|
|
|
|
|
4,879
|
|
||
Total gross deferred tax assets
|
|
171,731
|
|
|
|
|
186,552
|
|
||
Less: Valuation allowance
|
|
(11,032
|
)
|
|
|
|
(7,358
|
)
|
||
Total deferred tax assets
|
|
160,699
|
|
|
|
|
179,194
|
|
||
Deferred tax liabilities:
|
|
|
|
|
|
|
||||
Deferred financing costs
|
|
—
|
|
|
|
|
(8,797
|
)
|
||
Depreciation on property and equipment
|
|
(12,098
|
)
|
|
|
|
—
|
|
||
Amortization of intangible assets
|
|
(12,441
|
)
|
|
|
|
(15,241
|
)
|
||
Basis differences of partnerships and joint ventures
|
|
(2,399
|
)
|
|
|
|
(68,160
|
)
|
||
Deferred rent
|
|
(717
|
)
|
|
|
|
—
|
|
||
Other deferred liabilities
|
|
(725
|
)
|
|
|
|
(3,203
|
)
|
||
Total deferred tax liabilities
|
|
(28,380
|
)
|
|
|
|
(95,401
|
)
|
||
Net deferred tax assets
|
|
$
|
132,319
|
|
|
|
|
$
|
83,793
|
|
|
|
Successor
|
|
|
|
Predecessor
|
||||
|
|
December 31,
2017 |
|
|
|
December 31,
2016 |
||||
|
|
|
|
|
|
|
||||
Unrecognized tax benefits at beginning of year
|
|
$
|
1,061
|
|
|
|
|
$
|
1,403
|
|
Additions for acquired positions
|
|
36
|
|
|
|
|
—
|
|
||
Additions for tax positions of prior years
|
|
—
|
|
|
|
|
60
|
|
||
Reductions for tax positions of prior year
|
|
(407
|
)
|
|
|
|
(398
|
)
|
||
Settlements
|
|
—
|
|
|
|
|
(4
|
)
|
||
Unrecognized tax benefits at end of year
|
|
$
|
690
|
|
|
|
|
$
|
1,061
|
|
|
|
Unvested Shares
|
|
Weighted Average Grant Date Fair Value
|
|||
Predecessor
|
|
|
|
|
|||
Outstanding at January 1, 2015
|
|
1,242,065
|
|
|
$
|
1.96
|
|
Granted/Earned
|
|
569,114
|
|
|
6.31
|
|
|
Vested
|
|
(1,643,525
|
)
|
|
3.79
|
|
|
Outstanding at December 31, 2015
|
|
167,654
|
|
|
$
|
2.53
|
|
Granted/Earned
|
|
384,629
|
|
|
15.09
|
|
|
Forfeited/Canceled
|
|
(53,003
|
)
|
|
11.85
|
|
|
Vested
|
|
(37,038
|
)
|
|
6.31
|
|
|
Outstanding at December 31, 2016
|
|
462,242
|
|
|
$
|
3.72
|
|
Granted/Earned
|
|
388,454
|
|
|
18.40
|
|
|
Forfeited/Canceled
|
|
(67,771
|
)
|
|
18.01
|
|
|
Vested
|
|
(169,881
|
)
|
|
10.29
|
|
|
Outstanding at August 31, 2017
|
|
613,044
|
|
|
$
|
16.02
|
|
|
|
|
|
|
|||
|
|
|
|
|
|||
|
|
|
|
|
|||
Successor
|
|
|
|
|
|||
Outstanding at September 1, 2017
|
|
613,044
|
|
|
$
|
16.02
|
|
Granted/Earned
|
|
112,107
|
|
|
11.15
|
|
|
Forfeited/Canceled
|
|
(54,622
|
)
|
|
10.94
|
|
|
Vested
|
|
(96,073
|
)
|
|
17.03
|
|
|
Outstanding at December 31, 2017
|
|
574,456
|
|
|
$
|
15.95
|
|
▪
|
Risk-free interest rate
. The risk-free interest rate is used as a component of the fair value of stock options to take into account the time value of money. For the risk-free interest rate, the Company uses the implied yield on United States Treasury zero-coupon issues with a remaining term equal to the expected life, in years, of the options granted.
|
▪
|
Expected volatility
. Volatility, for the purpose of share-based compensation, is a measurement of the amount that a share price has fluctuated. Expected volatility involves reviewing historical volatility and determining what, if any, change the share price will have in the future. The Company used historical stock price information of certain peer group companies for a period of time equal to the expected option life period to determine estimated volatility.
|
▪
|
Expected life, in years
. A clear distinction is made between the expected life of an option and the contractual term of the option. The expected life of an option is considered the amount of time, in years, that an option is expected to be outstanding before it is exercised. Whereas, the contractual term of the stock option is the term an option is valid before it expires.
|
▪
|
Expected dividend yield
. Since issuing dividends will affect the fair value of a stock option, GAAP requires companies to estimate future dividend yields or payments. The Company has not historically issued dividends and does not intend to issue dividends in the future. As a result, the Company does not apply a dividend yield component to its valuation.
|
Expected volatility
|
|
29% - 43%
|
|
Risk-free interest rate
|
|
0.54% - 1.36%
|
|
Expected dividends
|
|
—
|
|
Average expected term (years)
|
|
2.56
|
|
Fair value of stock options granted
|
|
$2.64 - $5.74
|
|
|
|
Options
|
|
Weighted Average Exercise Price
|
|
Weighted Average Remaining Contractual Term (years)
|
|||
Predecessor
|
|
|
|
|
|
|
|||
Outstanding at January 1, 2015
|
|
—
|
|
|
|
|
|
||
Granted
|
|
8,488
|
|
|
$
|
20.03
|
|
|
3.0
|
Exercised
|
|
—
|
|
|
|
|
|
||
Forfeited
|
|
—
|
|
|
|
|
|
||
Outstanding at December 31, 2015
|
|
8,488
|
|
|
$
|
20.03
|
|
|
3.0
|
Granted
|
|
7,779
|
|
|
17.99
|
|
|
1.6
|
|
Exercised
|
|
—
|
|
|
|
|
|
||
Forfeited
|
|
—
|
|
|
|
|
|
||
Outstanding at December 31, 2016
|
|
16,267
|
|
|
$
|
19.05
|
|
|
1.8
|
Granted
|
|
—
|
|
|
|
|
|
||
Exercised
|
|
(3,580
|
)
|
|
15.36
|
|
|
|
|
Forfeited
|
|
—
|
|
|
|
|
|
||
Outstanding at August 31, 2017
|
|
12,687
|
|
|
$
|
20.10
|
|
|
1.5
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|||
Successor
|
|
|
|
|
|
|
|||
Outstanding at September 1, 2017
|
|
12,687
|
|
|
$
|
20.10
|
|
|
1.5
|
Granted
|
|
—
|
|
|
|
|
|
||
Exercised
|
|
—
|
|
|
|
|
|
||
Forfeited
|
|
—
|
|
|
|
|
|
||
Outstanding at December 31, 2017
(1)
|
|
12,687
|
|
|
$
|
20.10
|
|
|
1.2
|
|
|
Successor
|
|
|
|
Predecessor
|
||||||||||||
|
|
September 1 to
December 31, |
|
|
|
January 1 to
August 31, |
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Surgical facility services
|
|
$
|
564,458
|
|
|
|
|
$
|
688,725
|
|
|
$
|
1,042,097
|
|
|
$
|
884,144
|
|
Ancillary services
|
|
24,660
|
|
|
|
|
52,261
|
|
|
90,836
|
|
|
61,175
|
|
||||
Optical services
|
|
3,486
|
|
|
|
|
7,629
|
|
|
12,505
|
|
|
14,572
|
|
||||
Total revenues
|
|
$
|
592,604
|
|
|
|
|
$
|
748,615
|
|
|
$
|
1,145,438
|
|
|
$
|
959,891
|
|
|
|
Successor
|
|
|
|
Predecessor
|
||||||||||||
|
|
September 1 to
December 31, |
|
|
|
January 1 to
August 31, |
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||||
Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Surgical facility services
|
|
$
|
103,760
|
|
|
|
|
$
|
125,912
|
|
|
$
|
214,218
|
|
|
$
|
180,113
|
|
Ancillary services
|
|
(2,255
|
)
|
|
|
|
(6,526
|
)
|
|
12,685
|
|
|
18,715
|
|
||||
Optical services
|
|
736
|
|
|
|
|
2,214
|
|
|
3,308
|
|
|
3,905
|
|
||||
All other
|
|
(23,504
|
)
|
|
|
|
(36,036
|
)
|
|
(50,948
|
)
|
|
(44,680
|
)
|
||||
Total Adjusted EBITDA
(1)
|
|
78,737
|
|
|
|
|
85,564
|
|
|
179,263
|
|
|
158,053
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income attributable to non-controlling interests
|
|
39,634
|
|
|
|
|
42,087
|
|
|
75,630
|
|
|
71,416
|
|
||||
Depreciation and amortization
|
|
(21,804
|
)
|
|
|
|
(30,124
|
)
|
|
(39,551
|
)
|
|
(34,545
|
)
|
||||
Interest expense, net
|
|
(48,740
|
)
|
|
|
|
(68,929
|
)
|
|
(100,571
|
)
|
|
(100,980
|
)
|
||||
Non-cash stock compensation expense
|
|
(1,887
|
)
|
|
|
|
(3,697
|
)
|
|
(2,021
|
)
|
|
(7,502
|
)
|
||||
Contingent acquisition compensation expense
|
|
(1,982
|
)
|
|
|
|
(5,057
|
)
|
|
(5,092
|
)
|
|
—
|
|
||||
Termination of management agreement and IPO costs
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
(5,834
|
)
|
||||
Management fee
(2)
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
(2,250
|
)
|
||||
Merger transaction, integration and practice acquisition costs
(3)
|
|
(9,330
|
)
|
|
|
|
(7,677
|
)
|
|
(11,617
|
)
|
|
(20,579
|
)
|
||||
Gain on litigation settlement
|
|
8,740
|
|
|
|
|
3,794
|
|
|
14,101
|
|
|
—
|
|
||||
Gain on acquisition escrow release
|
|
167
|
|
|
|
|
1,000
|
|
|
—
|
|
|
—
|
|
||||
Gain (loss) on disposal or impairment of long-lived assets, net
|
|
(5
|
)
|
|
|
|
(1,715
|
)
|
|
(2,355
|
)
|
|
2,097
|
|
||||
Gain on amendment to tax receivable agreement
|
|
1,098
|
|
|
|
|
15,294
|
|
|
—
|
|
|
—
|
|
||||
Tax receivable agreement benefit (expense)
|
|
25,329
|
|
|
|
|
—
|
|
|
(3,733
|
)
|
|
(119,911
|
)
|
||||
Loss on debt refinancing
|
|
—
|
|
|
|
|
(18,211
|
)
|
|
(11,876
|
)
|
|
(16,102
|
)
|
||||
Income (loss) before income taxes
|
|
$
|
69,957
|
|
|
|
|
$
|
12,329
|
|
|
$
|
92,178
|
|
|
$
|
(76,137
|
)
|
|
|
Successor
|
|
|
|
Predecessor
|
||||
|
|
December 31,
2017 |
|
|
|
December 31,
2016 |
||||
Assets:
|
|
|
|
|
|
|
||||
Surgical facility services
|
|
$
|
4,072,521
|
|
|
|
|
$
|
1,914,842
|
|
Ancillary services
|
|
104,274
|
|
|
|
|
184,002
|
|
||
Optical services
|
|
48,309
|
|
|
|
|
22,478
|
|
||
All other
|
|
397,669
|
|
|
|
|
183,636
|
|
||
Total assets
|
|
$
|
4,622,773
|
|
|
|
|
$
|
2,304,958
|
|
|
|
Successor
|
|
|
|
Predecessor
|
||||||||||||
|
|
September 1 to
December 31, |
|
|
|
January 1 to
August 31, |
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||||
Cash purchases of property and equipment, net:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Surgical facility services
|
|
$
|
9,334
|
|
|
|
|
$
|
14,582
|
|
|
$
|
29,157
|
|
|
$
|
26,723
|
|
Ancillary services
|
|
191
|
|
|
|
|
1,875
|
|
|
5,388
|
|
|
1,051
|
|
||||
Optical services
|
|
83
|
|
|
|
|
73
|
|
|
351
|
|
|
128
|
|
||||
All other
|
|
1,219
|
|
|
|
|
2,243
|
|
|
4,213
|
|
|
5,537
|
|
||||
Total cash purchases of property and equipment, net
|
|
$
|
10,827
|
|
|
|
|
$
|
18,773
|
|
|
$
|
39,109
|
|
|
$
|
33,439
|
|
|
|
2017
|
||||||||||||||||||||
|
|
Predecessor
|
|
|
|
Successor
|
||||||||||||||||
|
|
Q1
|
|
Q2
|
|
Q3
(1)
|
|
|
|
Q3
(1)
|
|
Q4
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
286,183
|
|
|
$
|
288,353
|
|
|
$
|
174,079
|
|
|
|
|
$
|
132,258
|
|
|
$
|
460,346
|
|
Cost of revenues
|
|
$
|
211,948
|
|
|
$
|
216,452
|
|
|
$
|
143,772
|
|
|
|
|
$
|
102,924
|
|
|
$
|
338,704
|
|
Net income (loss)
|
|
$
|
14,422
|
|
|
$
|
11,627
|
|
|
$
|
4,369
|
|
|
|
|
$
|
(2,648
|
)
|
|
$
|
966
|
|
Net income attributable to non-controlling interests
|
|
$
|
(17,176
|
)
|
|
$
|
(16,098
|
)
|
|
$
|
(8,813
|
)
|
|
|
|
$
|
(6,492
|
)
|
|
$
|
(33,142
|
)
|
Net loss attributable to Surgery Partners, Inc.
|
|
$
|
(2,754
|
)
|
|
$
|
(4,471
|
)
|
|
$
|
(4,444
|
)
|
|
|
|
$
|
(9,140
|
)
|
|
$
|
(32,176
|
)
|
Basic net loss per share attributable to common stockholders
(2)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.09
|
)
|
|
|
|
$
|
(0.57
|
)
|
|
$
|
(0.83
|
)
|
Diluted net loss per share attributable to common stockholders
(2)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.09
|
)
|
|
|
|
$
|
(0.57
|
)
|
|
$
|
(0.83
|
)
|
|
|
2016
|
||||||||||||||
|
|
Predecessor
|
||||||||||||||
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
|
$
|
267,074
|
|
|
$
|
289,681
|
|
|
$
|
282,682
|
|
|
$
|
306,001
|
|
Cost of revenues
|
|
$
|
196,703
|
|
|
$
|
208,852
|
|
|
$
|
201,394
|
|
|
$
|
214,247
|
|
Net income
|
|
$
|
10,357
|
|
|
$
|
22,293
|
|
|
$
|
14,334
|
|
|
$
|
38,100
|
|
Net income attributable to non-controlling interests
|
|
$
|
(17,547
|
)
|
|
$
|
(20,173
|
)
|
|
$
|
(16,672
|
)
|
|
$
|
(21,238
|
)
|
Net (loss) income attributable to Surgery Partners, Inc.
|
|
$
|
(7,190
|
)
|
|
$
|
2,120
|
|
|
$
|
(2,338
|
)
|
|
$
|
16,862
|
|
Basic net (loss) income per share attributable to common stockholders
|
|
$
|
(0.15
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.05
|
)
|
|
$
|
0.35
|
|
Diluted net (loss) income per share attributable to common stockholders
|
|
$
|
(0.15
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.05
|
)
|
|
$
|
0.35
|
|
SURGERY PARTNERS, INC.
|
|
|
|
By:
|
/s/ Wayne S. DeVeydt
Wayne S. DeVeydt
Chief Executive Officer
(Principal Executive Officer)
|
SIGNATURES
|
TITLE
|
DATE
|
|
Chief Executive Officer, Director
(Principal Executive Officer)
|
March 16, 2018
|
/s/ Wayne S. DeVeydt
|
||
Wayne S. DeVeydt
|
|
|
|
Interim Chief Financial Officer
(Principal Financial Officer) |
March 16, 2018
|
/s/ R. David Kretschmer
|
||
R. David Kretschmer
|
|
|
|
Senior Vice President, Corporate Controller
(Principal Accounting Officer)
|
March 16, 2018
|
/s/ Dennis Dean
|
||
Dennis Dean
|
|
|
|
Chairman, Director
|
March 16, 2018
|
/s/ T. Devin O'Reilly
|
||
T. Devin O'Reilly
|
|
|
|
Director
|
March 16, 2018
|
/s/ Teresa DeLuca
|
||
Teresa DeLuca
|
|
|
|
Director
|
March 16, 2018
|
/s/ Adam Feinstein
|
||
Adam Feinstein
|
|
|
|
Director
|
March 16, 2018
|
/s/ Brent Turner
|
||
Brent Turner
|
|
|
|
Director
|
March 16, 2018
|
/s/ Christopher Gordon
|
||
Christopher Gordon
|
|
|
|
Director
|
March 16, 2018
|
/s/ Clifford G. Adlerz
|
||
Clifford G. Adlerz
|
|
|
Employee
|
Amount
|
[•]
|
[•]
|
Corporation:
|
SURGERY PARTNERS, INC.
|
Employee:
|
__________________________________
|
By:
|
/s/ Teresa F. Sparks
|
|
Name: Teresa F. Sparks
|
|
Title: Executive Vice President, Chief
Financial Officer
|
/s/ Michael T. Doyle
|
Michael T. Doyle
|
By:
|
/s/ Michael T. Doyle
|
|
Name: Michael T. Doyle
|
|
Title: Manager
|
|
|
Entity Name
|
Jurisdiction of Organization
|
Doing Business As
|
Advanced Pain Institute Treatment Center, LLC
|
Louisiana
|
|
Afshin Gerayli, MD
|
California
|
Pain Specialists of Orange County
|
AllCare Clinical Associates, P.A.
|
North Carolina
|
|
Ambulatory Resource Centres Investment Company, LLC
|
Delaware
|
|
Ambulatory Resource Centres of Washington, Inc.
|
Tennessee
|
|
Ambulatory Resource Centres of Wilmington, Inc.
|
Tennessee
|
|
Anesthesiology Professional Services, Inc.
|
Florida
|
|
Animas Surgical Hospital, LLC
|
Delaware
|
|
APS of Bradenton, LLC
|
Florida
|
|
APS of Hammond, LLC
|
Delaware
|
|
APS of Jonesboro, LLC
|
Delaware
|
|
APS of Merritt Island, LLC
|
Florida
|
|
APS of Suncoast, LLC
|
Florida
|
|
ARC Development Corporation
|
Tennessee
|
|
ARC Financial Services Corporation
|
Tennessee
|
|
ARC Kentucky, LLC
|
Tennessee
|
ARC Kentucky/Louisville, LLC
|
ARC of Bellingham, L.P.
|
Tennessee
|
|
ARC of Georgia, LLC
|
Tennessee
|
Premier Surgery Center
|
Arizona Spine & Joint Hospital, LLC
|
Arizona
|
|
Armenia Ambulatory Surgery Center, LLC
|
Florida
|
|
ASC Gamma Partners, Ltd.
|
Florida
|
West Kendall Surgical Center
|
ASC of New Albany, LLC
|
Indiana
|
|
Asheville Pain Relief Center, P.C.
|
North Carolina
|
|
ASJH Joint Venture, LLC
|
Arizona
|
|
Aspen Surgery Center, LLC
|
California
|
|
Baton Rouge Anesthesia Services, LLC
|
Delaware
|
|
Bay Area Surgical Ventures, LLC
|
California
|
|
Bayside Endoscopy Center, LLC
|
Rhode Island
|
|
Birmingham Surgery Center, LLC
|
Delaware
|
|
Blue Ridge NovaMed, Inc.
|
Missouri
|
|
Blue Ridge Surgical Center, LLC
|
Delaware
|
|
Boulder Spine Center, LLC
|
Delaware
|
Minimally Invasive Spine Institute
|
Bradenton Anesthesia Services, LLC
|
Florida
|
|
Brazos Valley Physicians Alliance
|
Texas
|
|
Brazos Valley Physicians Organization MSO, LLC
|
Texas
|
|
Brentwood Surgery Center, LLC
|
California
|
|
Bristol Spine Center, LLC
|
Delaware
|
Renaissance Surgery Center
|
Cache Valley Specialty Hospital, LLC
|
Utah
|
|
Canyon Ambulatory Surgery Center, LLC
|
North Carolina
|
|
Cape Coral Ambulatory Surgery Center, LLC
|
Florida
|
|
Cape Coral Anesthesia Services, LLC
|
Florida
|
|
CBSH, LLC
|
Texas
|
|
CC Pocatello, LLC
|
Idaho
|
|
CCIF, LLC
|
Delaware
|
|
Chesterfield Spine Center, LLC
|
Delaware
|
St. Louis Spine and Orthopedic Surgery Center
|
CMMP Surgical Center, L.L.C.
|
Missouri
|
|
CMSC, LLC
|
Montana
|
|
Coastal Bend Medical Park, LLC
|
Texas
|
|
Coastal Bend Surgery Center, Ltd
|
Texas
|
|
Coastal Pain Center, LLC
|
Georgia
|
|
Collier Anesthesia Pain, LLC
|
Florida
|
|
Community Care Channing Way, LLC
|
Delaware
|
|
Community Care Rexburg, LLC
|
Delaware
|
|
Community Care West Side, LLC
|
Delaware
|
|
Community Hospital Holding Company, LLC
|
Georgia
|
|
Community Hospital Management Company, LLC
|
Georgia
|
|
Complete Care Pharmacy, LLC
|
Florida
|
|
Consultants in Pain Medicine, LLC
|
Georgia
|
|
Cypress Surgery Center, LLC
|
Delaware
|
|
Delaware Outpatient Center for Surgery, LLC
|
Delaware
|
|
Dupont Anesthesia Services, P.S.C.
|
Kentucky
|
|
El Paso Specialty Hospital, Ltd
|
Texas
|
|
El Paso Specialty Physicians Group
|
Texas
|
|
Epix Anesthesia of Houston, PLLC
|
Texas
|
|
Fairfield Surgery Center, LLC
|
Connecticut
|
|
Great Falls Clinic Surgery Center, L.L.C.
|
Montana
|
|
Hammond Anesthesia Services, LLC
|
Louisiana
|
|
Honolulu Spine Center, LLC
|
Delaware
|
Honolulu Sports and Spine Center
|
IFSC Acquisition, LLC
|
Delaware
|
|
IPM Surgery Centers, LLC
|
California
|
SpinalCARE Surgicenter
|
Jacksonville Beach Surgery Center, LLC
|
Tennessee
|
Jacksonville Beach Surgery Center
|
Jenkins County Hospital, LLC
|
Georgia
|
|
Jonesboro Anesthesia Services, LLC
|
Arkansas
|
|
Kent, LLC
|
Rhode Island
|
|
Lafayette Surgical Hospital, LLC
|
Louisiana
|
|
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
|
|
Medical Billing Solutions, LLC
|
Florida
|
|
Medical Center Endoscopy, LLC
|
Texas
|
|
Midwest Uncuts, Inc.
|
Iowa
|
Midwest Labs
|
Millenia Surgery Center, L.L.C.
|
Florida
|
|
Minimally Invasive Surgical and Neuroscience Center, LLC
|
Delaware
|
|
Mission Hills Surgicenter, LLC
|
California
|
Mission Hills Pain Treatment Center
|
Montana Health Partners, LLC
|
Montana
|
|
Mountain View Hospital, LLC
|
Delaware
|
|
MV Oncology, LLC
|
Delaware
|
|
MVH Anesthesia, LLC
|
Idaho
|
Eagle Rock Anesthesia
|
MVH BMC, LLC
|
Idaho
|
|
MVH Idaho Falls Oncology, LLC
|
Delaware
|
|
MVH SNF Holding, LLC
|
Idaho
|
|
National Surgical Hospitals, Inc.
|
Delaware
|
|
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
|
|
North Carolina Specialty Hospital, LLC
|
North Carolina
|
|
North Dakota Surgery Center, LLC
|
Delaware
|
|
North Idaho Day Surgery, LLC
|
Idaho
|
|
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 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
|
Woodcrest Surgery Center
|
NovaMed Eye Surgery Center of Overland Park, LLC
|
Delaware
|
|
NovaMed Management of Kansas City, Inc.
|
Missouri
|
|
NovaMed Management Services, LLC
|
Delaware
|
|
NovaMed of Bethlehem, Inc.
|
Delaware
|
|
NovaMed of Laredo, Inc.
|
Delaware
|
|
NovaMed of Lebanon, Inc.
|
Delaware
|
|
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 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 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
|
NSH Bryan Hospital, Inc.
|
Texas
|
|
NSH California, Inc.
|
California
|
|
NSH Connecticut, Inc.
|
Connecticut
|
|
NSH Durham, Inc.
|
North Carolina
|
|
NSH El Paso Specialty Hospital, Inc.
|
Texas
|
|
NSH El Paso, Inc.
|
Texas
|
|
NSH Georgia, Inc.
|
Delaware
|
|
NSH Holdco, Inc.
|
Delaware
|
|
NSH Indiana, Inc.
|
Indiana
|
|
NSH LA GP Holdings, Inc.
|
Louisiana
|
|
NSH Logan, Inc.
|
Utah
|
|
NSH Louisiana, Inc.
|
Louisiana
|
|
NSH Management of Arizona, Inc.
|
Arizona
|
|
NSH Management of California, Inc.
|
California
|
|
NSH Mesa Real Estate, LLC
|
Arizona
|
|
NSH Mesa, Inc.
|
Arizona
|
|
NSH Michigan Properties, LLC
|
Michigan
|
|
NSH Michigan, Inc.
|
Michigan
|
|
NSH North Idaho, Inc.
|
Idaho
|
|
NSH Oklahoma, Inc.
|
Oklahoma
|
|
NSH San Antonio Surgical Hospital, Inc.
|
Texas
|
|
NSH Texas, Inc.
|
Illinois
|
|
NSH Wisconsin, Inc.
|
Wisconsin
|
|
Oak Leaf Surgical Hospital, LLC
|
Wisconsin
|
|
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
|
Orthopedic & Spine Surgical Hospital of South Texas, LP
|
Texas
|
|
Park Place Surgery Center, L.L.C.
|
Florida
|
|
Physicians Medical Center, L.L.C.
|
Louisiana
|
|
Physicians Surgery Center, LLC
|
Delaware
|
Lee Island Coast Surgery Center
|
Physicians Surgical Care, Inc.
|
Delaware
|
|
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
|
|
Quantum Enterprises, PLLC
|
Colorado
|
|
Riverside Anesthesia Services, LLC
|
Florida
|
|
Riverside Billing & Management Company, LLC
|
Florida
|
|
Riverside Spine & Pain Physicians, LLC
|
Florida
|
|
Riverside Surgical Center, LLC
|
Florida
|
|
Saint Thomas Compounding LLC
|
Florida
|
|
Sarasota Ambulatory Surgery Center, Ltd.
|
Florida
|
|
Sarasota Anesthesia Services, LLC
|
Florida
|
|
SARC/Asheville, Inc.
|
Tennessee
|
|
SARC/Ft. Myers, Inc.
|
Tennessee
|
|
SARC/Georgia, Inc.
|
Tennessee
|
|
SARC/Kent, LLC
|
Tennessee
|
|
SARC/Largo Endoscopy, Inc.
|
Tennessee
|
|
SARC/Largo, Inc.
|
Tennessee
|
|
SARC/Providence, LLC
|
Tennessee
|
|
SARC/St. Charles, Inc.
|
Tennessee
|
|
SARC/Vincennes, Inc.
|
Tennessee
|
|
Sentry Anesthesia Management, LLC
|
Georgia
|
|
Sentry Medical Billing, LLC
|
Georgia
|
|
Screven County Family Health Center, LLC
|
Georgia
|
|
Screven County Hospital, LLC
|
Georgia
|
|
Sequoia Surgical Center Holding Company, LLC
|
California
|
|
Sequoia Surgical Center, LP
|
California
|
|
Sequoia Surgical Pavillion, LLC
|
California
|
|
Skyway Surgery Center, LLC
|
California
|
|
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 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
|
|
Southeast Michigan Surgical Hospital, LLC
|
Michigan
|
|
Southern Crescent Anesthesiology, PC
|
Georgia
|
|
Southern Crescent Nurse Anesthesia, LLC
|
Georgia
|
|
SP California Management, LLC
|
Delaware
|
|
SP Holdco I, Inc.
|
Delaware
|
|
SP Louisiana, LLC
|
Louisiana
|
|
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
|
|
St. Louis Women’s Surgery Center, LLC
|
Delaware
|
St. Louis Women's Multispecialty Surgery Center
|
STSSH Physicians Organization
|
Texas
|
|
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 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
|
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
|
Central Florida Pain Relief Centers
|
|
|
Florida Orthopedic Partners
|
|
|
Florida Pain Institute - Melbourne
|
|
|
Florida Pain Institute - Merritt Island
|
|
|
Florida Pain Institute - Palm Bay
|
|
|
Florinda Pain Institute - Pineda
|
|
|
Florida Pain Institute - Titusville
|
|
|
Florida Pain Institute - Viera
|
|
|
Florida Pain Relief Centers
|
|
|
Florida Spine Sports and Rehabilitation Center
|
|
|
Jacksonville Pain Relief Center
|
|
|
Kaizen Orthopedics
|
|
|
Medical Village Urgent Care
|
|
|
Orlando Pain Relief Center
|
|
|
Pain Institute Of Tampa
|
|
|
Pain Management of Brandon
|
|
|
Pain Medicine Institute
|
|
|
Palm Beach Pain Relief Center
|
|
|
Rehabilitation Medical Group
|
|
|
Sarasota Pain Relief Center - Bee Ridge
|
|
|
Sarasota Pain Relief Center - Bradenton
|
|
|
Sarasota Pain Relief Center - CPCS
|
|
|
Sarasota Pain Relief Center - Downtown
|
|
|
Sarasota Pain Relief Center - PMC
|
|
|
Sarasota Pain Relief Center - Venice
|
|
|
Sarasota Pain Relief Center
|
|
|
South Florida Pain Relief Center - Boynton Beach
|
|
|
South Florida Pain Relief Center
|
|
|
Tampa Pain Relief Center - Himes
|
Tattnall Hospital Company, LLC
|
Georgia
|
|
Texarkana Surgery Center GP, Inc.
|
Texas
|
|
Texarkana Surgery Center, L.P.
|
Delaware
|
|
Texas Physician Group
|
Texas
|
Austin Wound Care and Hyperbaric Center
|
The Center for Special Surgery, LLC
|
Delaware
|
|
The Center for Specialized Surgery, LP
|
Pennsylvania
|
|
The Surgery Center of Ocala, LLC
|
Tennessee
|
|
The Surgery Center, L.L.C.
|
Georgia
|
|
UniPhy Healthcare of Johnson City VI, LLC
|
Tennessee
|
|
UniPhy Healthcare of Maine I, Inc.
|
Tennessee
|
|
United ASC Holding Company, LLC
|
Delaware
|
|
US Orthopedics, Inc.
|
North Carolina
|
|
Valley Ambulatory Surgery Center, L.P.
|
Illinois
|
|
Valley Medical Inn, L.P.
|
Illinois
|
|
Valley Surgical Center, Ltd.
|
Ohio
|
|
VASC, Inc.
|
Illinois
|
|
Village Surgicenter, Inc.
|
Delaware
|
|
Village Surgicenter, Limited Partnership
|
Delaware
|
|
West Bloomfield Surgery Center LLC
|
Michigan
|
|
Westchase Surgery Center, Ltd.
|
Florida
|
|
Wilmington Surgery Center, L.P.
|
Tennessee
|
|
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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
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
|
d)
|
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/ Wayne S. DeVeydt
Wayne S. DeVeydt
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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
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
|
d)
|
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/ R. David Kretschmer
R. David Kretschmer
Interim Chief Financial Officer
(Principal Financial 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/ Wayne S. DeVeydt
Wayne S. DeVeydt
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/ R. David Kretschmer
R. David Kretschmer
Interim Chief Financial Officer
(Principal Financial Officer)
|