Surgery Partners, Inc. (NASDAQ:SGRY) Q4 2022 Earnings Call Transcript

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Ben Rossi: Okay. Great. Really appreciate the color there.

Operator: Thank you. The next question comes from Kevin Fischbeck from Bank of America. Please proceed with your question, Kevin.

Kevin Fischbeck: Great, thanks. I would love just to get a little bit of color on your view about the competitive backdrop right now. It seems that there’s a number of companies looking to buy surgery centers and open up new centers and things like that. Have you seen anything change there from a multiple perspective, from an ability to source a physician’s perspective? And I guess, how do you differentiate your story when you go to market?

Wayne DeVeydt: Hey. Thanks, Kevin. Good to hear your voice. Let me first start by saying that we are seeing no slowdown at all in the number of facilities available, the quality of the facilities available or any changes in the multiples. So from that perspective, I would say, even though, to your question, it sounds like others are engaging. The one thing I would highlight is there’s a huge difference between acquiring the surgery center versus actually knowing how to run, bring value, create both on the quality side around the medicinal aspects of running the business and more importantly, the clinical aspects. But more importantly than really getting the advantages of scale. And I highlight that simply to say that probably the biggest moat that we have is that it took 20 years for this asset to get to the size of scale that it is at today.

And in the last five years, a real intentional effort of building a true platform so that through acquisitions you could do a plug-and-play and really bring that value to our Surgery Partners and our patients immediately. So I would say, not concerned at all by those that are pursuing assets. There’s a nice self-selection process. Eric always reminds us, there’s great self-selection. Those that are looking to simply sell their facilities to get their retirement funds or knock those that we’re looking to pursue. But rather, we’re more interested in those facilities that are aligned with really changing the health care dynamic and the quality dynamic. And more importantly, really removing costs from the system. And those are the ones that really want to align with us for the long-term.

But in general, I don’t see our pipeline slowing down at all.

Eric Evans: Yes, Kevin, I would only add on the value proposition question. I mean we differentiate ourselves in competitive situation for centers by being that independent operator that doesn’t come with any conflicts. We’re not owned by a health system. We’re not owned by a health plan. These physicians that have created very successful independent centers. They did that for a reason. They didn’t want conflicts. And so that allows us to move quickly on adding any service line we want, moving to create the most value we can without any other kind of reasons not to do that. So I think that’s a differentiator for us. We’re also very quick in our ability to move on opportunities. And I think all those things play well for us. But I would agree with Wayne’s comments wholeheartedly that if anything, the pipeline is a bit better. And I would say that we’re probably as well positioned as we’ve ever been to continue to win a majority of the centers we want.

Kevin Fischbeck: All right. Great. And then I guess just on the pricing side of things, you mentioned inflation that’s something that you’re keeping an eye on and managing pretty well. What is the rate outlook going forward? And I guess, an update on the re-contracting dynamics that you guys have spoken about over the last few years. Thanks.

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