Surgery partners reported revenues were up in the first quarter based on the company's success before the pandemic hit.
"While our business was substantially impacted by the COVID-19 pandemic beginning in mid-March, we believe the strength of our business model and the execution of our leadership team and front-line associates will enable Surgery Partners to persevere and return to growth as our country begins to reopen. We feel privileged to be on the front line supporting our patients and our communities," said Executive Chairman Wayne DeVeydt.
Six things to know:
1. Surgery Partner's first quarter revenue jumped 5.8 percent year over year to $441 million. Same-facility revenues were also up slightly during the quarter.
2. Net loss attributable to common shareholders was $37 million and adjusted EBITDA decreased 8.3 percent year over year to $46.5 million.
3. Surgery Partners reported $194.6 million cash and cash equivalents to end the quarter after drawing down its full capacity under its revolving credit facility on March 18. The company amended its credit agreement, which it disclosed on April 22, to provide increased flexibility.
4. As of April 7, Surgery Partners reported it has received around $45 million in funding from the CARES Act in direct grant payments as well as $120 million in accelerated payments from the Medicare Accelerated and Advanced Payment Program.
5. At the end of the quarter, Surgery Partners reported 127 surgical facilities, including ASCs and surgical hospitals, that performed 115,552 procedures. This is up from the first quarter of 2019 when the company reported 123 centers that performed 123,900 cases. The average adjusted revenue per case was $3,900, up from $3,429 over the same period last year.
6. Same-facility cases dropped 8 percent in the quarter while revenue per case grew from $3,138 to $3,497.
During the first quarter earnings call, Mr. DeVeydt reported that case volumes dropped by around 75 percent at some facilities that were reduced to one or two days of operation per week to serve only the most critical patients. "Our team quickly mobilized to the task at hand, reducing facility-level overhead, slowing capital distributions while tightly managing working capital," he said, as transcribed by Seeking Alpha. "But know that this team reacted swiftly, decisively and responsibly to preserve our business and liquidity"
He also said the company's physician recruiting efforts over the past two months "have yielded strong results" and its pipeline for future acquisitions and partnerships with providers, patients and payers is still robust.
Surgery Partners did report workforce reduction, particularly at the corporate level, and converted salaried workers to an hourly rate. It also engaged in furloughs and reduced pay for some top executives by 50 percent; it also reduced the salary of a majority of corporate employees by 20 percent.
The company has now restarted elective procedures at centers in California and Florida, which represents around 15 percent of the company's revenue. As the ASCs reopen, one of the big challenges could be the supply chain. "Our procurement teams have done an exceptional job this year, proactively managing our supply and actively securing alternate supply on the spot market," said CEO Eric Evans. "While appropriate use and conservation of PPE remains a focus of our entire team, our channel checks indicate that some of the most difficult items defined, like masks, should become much more widely available over the next few weeks."
The company did not provide a 2020 outlook due to the pandemic, but CFO Tom Cowhy said the company is optimistic that there will be higher volumes at its centers in May.
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