00016388332024Q3False12/31http://fasb.org/us-gaap/2024#PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetAfterAccumulatedDepreciationAndAmortizationhttp://fasb.org/us-gaap/2024#PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetAfterAccumulatedDepreciationAndAmortizationhttp://fasb.org/us-gaap/2024#OtherLiabilitiesCurrenthttp://fasb.org/us-gaap/2024#OtherLiabilitiesCurrenthttp://fasb.org/us-gaap/2024#LongTermDebtAndCapitalLeaseObligationsCurrenthttp://fasb.org/us-gaap/2024#LongTermDebtAndCapitalLeaseObligationsCurrenthttp://fasb.org/us-gaap/2024#LongTermDebtAndCapitalLeaseObligationshttp://fasb.org/us-gaap/2024#LongTermDebtAndCapitalLeaseObligationshttp://fasb.org/us-gaap/2024#InterestIncomeExpenseNonoperatingNethttp://fasb.org/us-gaap/2024#InterestIncomeExpenseNonoperatingNethttp://fasb.org/us-gaap/2024#InterestIncomeExpenseNonoperatingNethttp://fasb.org/us-gaap/2024#InterestIncomeExpenseNonoperatingNetxbrli:sharesiso4217:USDiso4217:USDxbrli:sharessgry:facilitysgry:statexbrli:puresgry:physician_practicesgry:surgical_facilitysgry:de_novo_surgical_facilitysgry:interest_rate_swapsgry:segment00016388332024-01-012024-09-3000016388332024-11-0500016388332024-09-3000016388332023-12-3100016388332024-07-012024-09-3000016388332023-07-012023-09-3000016388332023-01-012023-09-300001638833us-gaap:CommonStockMember2023-12-310001638833us-gaap:AdditionalPaidInCapitalMember2023-12-310001638833us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember2023-12-310001638833us-gaap:RetainedEarningsMember2023-12-310001638833us-gaap:NoncontrollingInterestMember2023-12-310001638833us-gaap:RetainedEarningsMember2024-01-012024-03-310001638833us-gaap:NoncontrollingInterestMember2024-01-012024-03-3100016388332024-01-012024-03-310001638833us-gaap:CommonStockMember2024-01-012024-03-310001638833us-gaap:AdditionalPaidInCapitalMember2024-01-012024-03-310001638833us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember2024-01-012024-03-310001638833us-gaap:CommonStockMember2024-03-310001638833us-gaap:AdditionalPaidInCapitalMember2024-03-310001638833us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember2024-03-310001638833us-gaap:RetainedEarningsMember2024-03-310001638833us-gaap:NoncontrollingInterestMember2024-03-3100016388332024-03-310001638833us-gaap:RetainedEarningsMember2024-04-012024-06-300001638833us-gaap:NoncontrollingInterestMember2024-04-012024-06-3000016388332024-04-012024-06-300001638833us-gaap:CommonStockMember2024-04-012024-06-300001638833us-gaap:AdditionalPaidInCapitalMember2024-04-012024-06-300001638833us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember2024-04-012024-06-300001638833us-gaap:CommonStockMember2024-06-300001638833us-gaap:AdditionalPaidInCapitalMember2024-06-300001638833us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember2024-06-300001638833us-gaap:RetainedEarningsMember2024-06-300001638833us-gaap:NoncontrollingInterestMember2024-06-3000016388332024-06-300001638833us-gaap:RetainedEarningsMember2024-07-012024-09-300001638833us-gaap:NoncontrollingInterestMember2024-07-012024-09-300001638833us-gaap:CommonStockMember2024-07-012024-09-300001638833us-gaap:AdditionalPaidInCapitalMember2024-07-012024-09-300001638833us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember2024-07-012024-09-300001638833us-gaap:CommonStockMember2024-09-300001638833us-gaap:AdditionalPaidInCapitalMember2024-09-300001638833us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember2024-09-300001638833us-gaap:RetainedEarningsMember2024-09-300001638833us-gaap:NoncontrollingInterestMember2024-09-300001638833us-gaap:CommonStockMember2022-12-310001638833us-gaap:AdditionalPaidInCapitalMember2022-12-310001638833us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember2022-12-310001638833us-gaap:RetainedEarningsMember2022-12-310001638833us-gaap:NoncontrollingInterestMember2022-12-3100016388332022-12-310001638833us-gaap:RetainedEarningsMember2023-01-012023-03-310001638833us-gaap:NoncontrollingInterestMember2023-01-012023-03-3100016388332023-01-012023-03-310001638833us-gaap:CommonStockMember2023-01-012023-03-310001638833us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-310001638833us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember2023-01-012023-03-310001638833us-gaap:CommonStockMember2023-03-310001638833us-gaap:AdditionalPaidInCapitalMember2023-03-310001638833us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember2023-03-310001638833us-gaap:RetainedEarningsMember2023-03-310001638833us-gaap:NoncontrollingInterestMember2023-03-3100016388332023-03-310001638833us-gaap:RetainedEarningsMember2023-04-012023-06-300001638833us-gaap:NoncontrollingInterestMember2023-04-012023-06-3000016388332023-04-012023-06-300001638833us-gaap:CommonStockMember2023-04-012023-06-300001638833us-gaap:AdditionalPaidInCapitalMember2023-04-012023-06-300001638833us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember2023-04-012023-06-300001638833us-gaap:CommonStockMember2023-06-300001638833us-gaap:AdditionalPaidInCapitalMember2023-06-300001638833us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember2023-06-300001638833us-gaap:RetainedEarningsMember2023-06-300001638833us-gaap:NoncontrollingInterestMember2023-06-3000016388332023-06-300001638833us-gaap:RetainedEarningsMember2023-07-012023-09-300001638833us-gaap:NoncontrollingInterestMember2023-07-012023-09-300001638833us-gaap:CommonStockMember2023-07-012023-09-300001638833us-gaap:AdditionalPaidInCapitalMember2023-07-012023-09-300001638833us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember2023-07-012023-09-300001638833us-gaap:CommonStockMember2023-09-300001638833us-gaap:AdditionalPaidInCapitalMember2023-09-300001638833us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember2023-09-300001638833us-gaap:RetainedEarningsMember2023-09-300001638833us-gaap:NoncontrollingInterestMember2023-09-3000016388332023-09-300001638833sgry:FacilitiesAmbulatorySurgeryCentersMember2024-09-300001638833sgry:FacilitiesSurgicalHospitalsMember2024-09-300001638833us-gaap:ProductConcentrationRiskMembersgry:SurgicalFacilityServicesMemberus-gaap:SalesRevenueNetMember2024-07-012024-09-300001638833us-gaap:ProductConcentrationRiskMembersgry:SurgicalFacilityServicesMemberus-gaap:SalesRevenueNetMember2023-07-012023-09-300001638833us-gaap:ProductConcentrationRiskMembersgry:SurgicalFacilityServicesMemberus-gaap:SalesRevenueNetMember2024-01-012024-09-300001638833us-gaap:ProductConcentrationRiskMembersgry:SurgicalFacilityServicesMemberus-gaap:SalesRevenueNetMember2023-01-012023-09-300001638833us-gaap:ProductConcentrationRiskMembersgry:AncillaryServicesMemberus-gaap:SalesRevenueNetMember2024-07-012024-09-300001638833us-gaap:ProductConcentrationRiskMembersgry:AncillaryServicesMemberus-gaap:SalesRevenueNetMember2023-07-012023-09-300001638833us-gaap:ProductConcentrationRiskMembersgry:AncillaryServicesMemberus-gaap:SalesRevenueNetMember2024-01-012024-09-300001638833us-gaap:ProductConcentrationRiskMembersgry:AncillaryServicesMemberus-gaap:SalesRevenueNetMember2023-01-012023-09-300001638833us-gaap:ProductConcentrationRiskMembersgry:HealthcareOrganizationPatientServiceMemberus-gaap:SalesRevenueNetMember2024-07-012024-09-300001638833us-gaap:ProductConcentrationRiskMembersgry:HealthcareOrganizationPatientServiceMemberus-gaap:SalesRevenueNetMember2023-07-012023-09-300001638833us-gaap:ProductConcentrationRiskMembersgry:HealthcareOrganizationPatientServiceMemberus-gaap:SalesRevenueNetMember2024-01-012024-09-300001638833us-gaap:ProductConcentrationRiskMembersgry:HealthcareOrganizationPatientServiceMemberus-gaap:SalesRevenueNetMember2023-01-012023-09-300001638833us-gaap:ProductConcentrationRiskMembersgry:OtherServicesMemberus-gaap:SalesRevenueNetMember2024-07-012024-09-300001638833us-gaap:ProductConcentrationRiskMembersgry:OtherServicesMemberus-gaap:SalesRevenueNetMember2023-07-012023-09-300001638833us-gaap:ProductConcentrationRiskMembersgry:OtherServicesMemberus-gaap:SalesRevenueNetMember2024-01-012024-09-300001638833us-gaap:ProductConcentrationRiskMembersgry:OtherServicesMemberus-gaap:SalesRevenueNetMember2023-01-012023-09-300001638833us-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMember2024-07-012024-09-300001638833us-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMember2023-07-012023-09-300001638833us-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMember2024-01-012024-09-300001638833us-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMember2023-01-012023-09-300001638833sgry:PrivateInsuranceMember2024-07-012024-09-300001638833us-gaap:CustomerConcentrationRiskMembersgry:PrivateInsuranceMemberus-gaap:SalesRevenueNetMember2024-07-012024-09-300001638833sgry:PrivateInsuranceMember2023-07-012023-09-300001638833us-gaap:CustomerConcentrationRiskMembersgry:PrivateInsuranceMemberus-gaap:SalesRevenueNetMember2023-07-012023-09-300001638833sgry:GovernmentRevenueMember2024-07-012024-09-300001638833us-gaap:CustomerConcentrationRiskMembersgry:GovernmentRevenueMemberus-gaap:SalesRevenueNetMember2024-07-012024-09-300001638833sgry:GovernmentRevenueMember2023-07-012023-09-300001638833us-gaap:CustomerConcentrationRiskMembersgry:GovernmentRevenueMemberus-gaap:SalesRevenueNetMember2023-07-012023-09-300001638833sgry:SelfPayRevenueMember2024-07-012024-09-300001638833us-gaap:CustomerConcentrationRiskMembersgry:SelfPayRevenueMemberus-gaap:SalesRevenueNetMember2024-07-012024-09-300001638833sgry:SelfPayRevenueMember2023-07-012023-09-300001638833us-gaap:CustomerConcentrationRiskMembersgry:SelfPayRevenueMemberus-gaap:SalesRevenueNetMember2023-07-012023-09-300001638833sgry:OtherPatientServiceRevenueSourcesMember2024-07-012024-09-300001638833us-gaap:CustomerConcentrationRiskMembersgry:OtherPatientServiceRevenueSourcesMemberus-gaap:SalesRevenueNetMember2024-07-012024-09-300001638833sgry:OtherPatientServiceRevenueSourcesMember2023-07-012023-09-300001638833us-gaap:CustomerConcentrationRiskMembersgry:OtherPatientServiceRevenueSourcesMemberus-gaap:SalesRevenueNetMember2023-07-012023-09-300001638833sgry:HealthcareOrganizationPatientServiceMember2024-07-012024-09-300001638833us-gaap:CustomerConcentrationRiskMembersgry:HealthcareOrganizationPatientServiceMemberus-gaap:SalesRevenueNetMember2024-07-012024-09-300001638833sgry:HealthcareOrganizationPatientServiceMember2023-07-012023-09-300001638833us-gaap:CustomerConcentrationRiskMembersgry:HealthcareOrganizationPatientServiceMemberus-gaap:SalesRevenueNetMember2023-07-012023-09-300001638833sgry:OtherServicesMember2024-07-012024-09-300001638833sgry:OtherServicesMember2023-07-012023-09-300001638833sgry:PrivateInsuranceMember2024-01-012024-09-300001638833us-gaap:CustomerConcentrationRiskMembersgry:PrivateInsuranceMemberus-gaap:SalesRevenueNetMember2024-01-012024-09-300001638833sgry:PrivateInsuranceMember2023-01-012023-09-300001638833us-gaap:CustomerConcentrationRiskMembersgry:PrivateInsuranceMemberus-gaap:SalesRevenueNetMember2023-01-012023-09-300001638833sgry:GovernmentRevenueMember2024-01-012024-09-300001638833us-gaap:CustomerConcentrationRiskMembersgry:GovernmentRevenueMemberus-gaap:SalesRevenueNetMember2024-01-012024-09-300001638833sgry:GovernmentRevenueMember2023-01-012023-09-300001638833us-gaap:CustomerConcentrationRiskMembersgry:GovernmentRevenueMemberus-gaap:SalesRevenueNetMember2023-01-012023-09-300001638833sgry:SelfPayRevenueMember2024-01-012024-09-300001638833us-gaap:CustomerConcentrationRiskMembersgry:SelfPayRevenueMemberus-gaap:SalesRevenueNetMember2024-01-012024-09-300001638833sgry:SelfPayRevenueMember2023-01-012023-09-300001638833us-gaap:CustomerConcentrationRiskMembersgry:SelfPayRevenueMemberus-gaap:SalesRevenueNetMember2023-01-012023-09-300001638833sgry:OtherPatientServiceRevenueSourcesMember2024-01-012024-09-300001638833us-gaap:CustomerConcentrationRiskMembersgry:OtherPatientServiceRevenueSourcesMemberus-gaap:SalesRevenueNetMember2024-01-012024-09-300001638833sgry:OtherPatientServiceRevenueSourcesMember2023-01-012023-09-300001638833us-gaap:CustomerConcentrationRiskMembersgry:OtherPatientServiceRevenueSourcesMemberus-gaap:SalesRevenueNetMember2023-01-012023-09-300001638833sgry:HealthcareOrganizationPatientServiceMember2024-01-012024-09-300001638833us-gaap:CustomerConcentrationRiskMembersgry:HealthcareOrganizationPatientServiceMemberus-gaap:SalesRevenueNetMember2024-01-012024-09-300001638833sgry:HealthcareOrganizationPatientServiceMember2023-01-012023-09-300001638833us-gaap:CustomerConcentrationRiskMembersgry:HealthcareOrganizationPatientServiceMemberus-gaap:SalesRevenueNetMember2023-01-012023-09-300001638833sgry:OtherServicesMember2024-01-012024-09-300001638833sgry:OtherServicesMember2023-01-012023-09-300001638833sgry:A2017TermLoanMaturing2024Memberus-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:SecuredDebtMember2024-09-300001638833sgry:A2017TermLoanMaturing2024Memberus-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:SecuredDebtMember2023-12-310001638833us-gaap:FairValueInputsLevel2Membersgry:A2017TermLoanMaturing2024Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:SecuredDebtMember2024-09-300001638833us-gaap:FairValueInputsLevel2Membersgry:A2017TermLoanMaturing2024Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:SecuredDebtMember2023-12-310001638833sgry:SeniorUnsecuredNotesDue2025Memberus-gaap:SeniorNotesMember2023-12-310001638833sgry:SeniorUnsecuredNotesDue2025Memberus-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:SeniorNotesMember2024-09-300001638833sgry:SeniorUnsecuredNotesDue2025Memberus-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:SeniorNotesMember2023-12-310001638833us-gaap:FairValueInputsLevel2Membersgry:SeniorUnsecuredNotesDue2025Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:SeniorNotesMember2024-09-300001638833us-gaap:FairValueInputsLevel2Membersgry:SeniorUnsecuredNotesDue2025Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:SeniorNotesMember2023-12-310001638833sgry:SeniorUnsecuredNotesDue2027Memberus-gaap:SeniorNotesMember2023-12-310001638833sgry:SeniorUnsecuredNotesDue2027Memberus-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:SeniorNotesMember2024-09-300001638833sgry:SeniorUnsecuredNotesDue2027Memberus-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:SeniorNotesMember2023-12-310001638833us-gaap:FairValueInputsLevel2Membersgry:SeniorUnsecuredNotesDue2027Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:SeniorNotesMember2024-09-300001638833us-gaap:FairValueInputsLevel2Membersgry:SeniorUnsecuredNotesDue2027Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:SeniorNotesMember2023-12-310001638833sgry:SeniorUnsecuredNotesDue2032Memberus-gaap:SeniorNotesMember2024-09-300001638833sgry:SeniorUnsecuredNotesDue2032Memberus-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:SeniorNotesMember2024-09-300001638833sgry:SeniorUnsecuredNotesDue2032Memberus-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:SeniorNotesMember2023-12-310001638833us-gaap:FairValueInputsLevel2Membersgry:SeniorUnsecuredNotesDue2032Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:SeniorNotesMember2024-09-300001638833us-gaap:FairValueInputsLevel2Membersgry:SeniorUnsecuredNotesDue2032Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:SeniorNotesMember2023-12-310001638833us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2024-09-300001638833us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2023-12-310001638833sgry:SurgicalFacilitiesAndAnesthesiaPracticeMember2024-01-012024-09-300001638833sgry:SurgicalFacilitiesAndAnesthesiaPracticeMember2024-09-300001638833sgry:SurgicalFacilitiesAndPhysicianPracticesMember2023-01-012023-09-300001638833sgry:SurgicalFacilitiesAndPhysicianPracticesMember2023-09-300001638833sgry:SurgicalFacilitiesAndInDevelopmentDeNovoSurgicalFacilityMember2023-01-012023-09-300001638833sgry:SurgicalFacilitiesAndInDevelopmentDeNovoSurgicalFacilityMember2023-09-300001638833us-gaap:EquityMethodInvestmentsMember2023-01-012023-09-300001638833sgry:SurgicalFacilitiesAndInDevelopmentDeNovoSurgicalFacilitiesMember2023-01-012023-09-300001638833sgry:SurgicalFacilitiesAndInDevelopmentDeNovoSurgicalFacilitiesMembersgry:ManagementRightsAgreementMember2023-09-300001638833sgry:SurgicalFacilitiesAndInDevelopmentDeNovoSurgicalFacilitiesMembersgry:ManagementRightsAgreementMemberus-gaap:EquityMethodInvestmentsMember2023-01-012023-09-300001638833us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMembersgry:SurgicalFacilityEquityMethodInvestmentMember2024-01-012024-09-300001638833us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMembersgry:SurgicalFacilityWithARetainedInterestMember2024-01-012024-09-300001638833us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMembersgry:SurgicalFacilityMember2024-01-012024-09-300001638833us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMembersgry:A2023DisposalsMember2023-01-012023-09-300001638833us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMembersgry:SurgicalFacilitiesAndInDevelopmentDeNovoSurgicalFacilitiesMember2023-01-012023-09-300001638833sgry:A2017TermLoanMaturing2024Memberus-gaap:SecuredDebtMember2024-09-300001638833sgry:A2017TermLoanMaturing2024Memberus-gaap:SecuredDebtMember2023-12-310001638833sgry:A2017SeniorSecuredCreditFacilityMemberus-gaap:SecuredDebtMember2024-09-300001638833sgry:A2017SeniorSecuredCreditFacilityMemberus-gaap:SecuredDebtMember2023-12-310001638833sgry:SeniorUnsecuredNotesDue2025Memberus-gaap:SeniorNotesMember2024-09-300001638833sgry:SeniorUnsecuredNotesDue2027Memberus-gaap:SeniorNotesMember2024-09-300001638833sgry:SeniorUnsecuredNotesDue2032Memberus-gaap:SeniorNotesMember2023-12-310001638833sgry:NotesPayableAndSecuredLoansMember2024-09-300001638833sgry:NotesPayableAndSecuredLoansMember2023-12-310001638833sgry:A2017SeniorSecuredCreditFacilityMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:SecuredDebtMember2024-09-300001638833sgry:CreditFacilityMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:SecuredDebtMember2024-09-300001638833sgry:CreditFacilityMemberus-gaap:LetterOfCreditMemberus-gaap:SecuredDebtMember2024-09-300001638833sgry:SeniorUnsecuredNotesDue2032Memberus-gaap:SeniorNotesMember2024-04-100001638833sgry:SeniorUnsecuredNotesDue2025Memberus-gaap:SeniorNotesMember2024-04-100001638833sgry:SeniorUnsecuredNotesDue2027Memberus-gaap:SeniorNotesMember2024-04-100001638833sgry:SeniorUnsecuredNotesDue2032Memberus-gaap:SeniorNotesMember2024-01-012024-09-300001638833sgry:A2024RefinancingTermLoansMemberus-gaap:SecuredDebtMember2024-06-200001638833sgry:A2024RefinancingTermLoansMemberus-gaap:SecuredDebtMembersgry:TermRateBasedSecuredOvernightFinancingRateSOFRMember2024-06-202024-06-200001638833sgry:A2024RefinancingTermLoansMemberus-gaap:SecuredDebtMemberus-gaap:FederalFundsEffectiveSwapRateMember2024-06-202024-06-200001638833sgry:A2024RefinancingTermLoansMemberus-gaap:SecuredDebtMemberus-gaap:SecuredOvernightFinancingRateSofrMember2024-06-202024-06-200001638833sgry:A2024RefinancingTermLoansMemberus-gaap:SecuredDebtMemberus-gaap:BaseRateMember2024-06-202024-06-200001638833sgry:A2024RefinancingTermLoansMemberus-gaap:SecuredDebtMember2024-06-202024-06-200001638833sgry:A2024RefinancingTermLoansMemberus-gaap:SecuredDebtMember2024-01-012024-09-300001638833sgry:PayFixedSwapOneMember2024-09-300001638833sgry:PayFixedSwapOneMember2023-12-310001638833sgry:PayFixedSwapTwoMember2024-09-300001638833sgry:PayFixedSwapTwoMember2023-12-310001638833sgry:PayFixedSwapThreeMember2024-09-300001638833sgry:PayFixedSwapThreeMember2023-12-310001638833sgry:InterestRateCapOneMember2024-09-300001638833sgry:InterestRateCapOneMember2023-12-310001638833sgry:InterestRateCapTwoMember2024-09-300001638833sgry:InterestRateCapTwoMember2023-12-310001638833sgry:DeferredPremiumCap1Member2024-09-300001638833sgry:DeferredPremiumCap1Member2023-12-310001638833sgry:DeferredPremiumCap2Member2024-09-300001638833sgry:DeferredPremiumCap2Member2023-12-310001638833sgry:DeferredPremiumCap3Member2024-09-300001638833sgry:DeferredPremiumCap3Member2023-12-310001638833sgry:DeferredPremiumCap4Member2024-09-300001638833sgry:DeferredPremiumCap4Member2023-12-310001638833sgry:DeferredPremiumCap5Member2024-09-300001638833sgry:DeferredPremiumCap5Member2023-12-310001638833us-gaap:InterestRateSwapMember2024-09-300001638833us-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2024-09-300001638833us-gaap:InterestRateSwapMembersrt:MinimumMember2024-09-300001638833us-gaap:InterestRateCapMember2024-09-300001638833us-gaap:InterestRateCapMemberus-gaap:NondesignatedMember2023-01-012023-09-300001638833sgry:DeferredPremiumCapMember2024-04-090001638833sgry:DeferredPremiumCapMember2024-09-300001638833us-gaap:InterestRateCapMemberus-gaap:DesignatedAsHedgingInstrumentMember2024-09-300001638833us-gaap:InterestRateCapMemberus-gaap:DesignatedAsHedgingInstrumentMember2023-12-310001638833us-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2023-12-310001638833us-gaap:NondesignatedMember2024-07-012024-09-300001638833us-gaap:NondesignatedMember2023-07-012023-09-300001638833us-gaap:NondesignatedMember2024-01-012024-09-300001638833us-gaap:NondesignatedMember2023-01-012023-09-300001638833us-gaap:DesignatedAsHedgingInstrumentMember2024-07-012024-09-300001638833us-gaap:DesignatedAsHedgingInstrumentMember2023-07-012023-09-300001638833us-gaap:DesignatedAsHedgingInstrumentMember2024-01-012024-09-300001638833us-gaap:DesignatedAsHedgingInstrumentMember2023-01-012023-09-300001638833us-gaap:EmployeeStockOptionMember2024-07-012024-09-300001638833us-gaap:EmployeeStockOptionMember2023-07-012023-09-300001638833us-gaap:EmployeeStockOptionMember2024-01-012024-09-300001638833us-gaap:EmployeeStockOptionMember2023-01-012023-09-300001638833us-gaap:RestrictedStockMember2024-07-012024-09-300001638833us-gaap:RestrictedStockMember2023-07-012023-09-300001638833us-gaap:RestrictedStockMember2024-01-012024-09-300001638833us-gaap:RestrictedStockMember2023-01-012023-09-300001638833us-gaap:OperatingSegmentsMembersgry:SurgicalFacilityServicesMember2024-07-012024-09-300001638833us-gaap:OperatingSegmentsMembersgry:SurgicalFacilityServicesMember2023-07-012023-09-300001638833us-gaap:OperatingSegmentsMembersgry:SurgicalFacilityServicesMember2024-01-012024-09-300001638833us-gaap:OperatingSegmentsMembersgry:SurgicalFacilityServicesMember2023-01-012023-09-300001638833us-gaap:OperatingSegmentsMembersgry:AncillaryServicesMember2024-07-012024-09-300001638833us-gaap:OperatingSegmentsMembersgry:AncillaryServicesMember2023-07-012023-09-300001638833us-gaap:OperatingSegmentsMembersgry:AncillaryServicesMember2024-01-012024-09-300001638833us-gaap:OperatingSegmentsMembersgry:AncillaryServicesMember2023-01-012023-09-300001638833us-gaap:CorporateNonSegmentMember2024-07-012024-09-300001638833us-gaap:CorporateNonSegmentMember2023-07-012023-09-300001638833us-gaap:CorporateNonSegmentMember2024-01-012024-09-300001638833us-gaap:CorporateNonSegmentMember2023-01-012023-09-300001638833us-gaap:OperatingSegmentsMembersgry:SurgicalFacilityServicesMember2024-09-300001638833us-gaap:OperatingSegmentsMembersgry:SurgicalFacilityServicesMember2023-12-310001638833us-gaap:OperatingSegmentsMembersgry:AncillaryServicesMember2024-09-300001638833us-gaap:OperatingSegmentsMembersgry:AncillaryServicesMember2023-12-310001638833us-gaap:CorporateNonSegmentMember2024-09-300001638833us-gaap:CorporateNonSegmentMember2023-12-31

☒     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(Exact name of registrant as specified in its charter)

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ☒  No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  ☒ No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐  No  ☒

As of November 5, 2024, there were 127,113,514 shares of the registrant’s common stock outstanding.

(1)The impact of potentially dilutive securities for all periods was not considered because the effect would be anti-dilutive.

Surgery Partners, Inc., a Delaware corporation, acting through its subsidiaries, owns and operates a national network of surgical facilities and ancillary services. The surgical facilities, which include ambulatory surgery centers ("ASCs") and surgical hospitals, primarily provide non-emergency surgical procedures across many specialties, including orthopedics and pain management, gastroenterology, ophthalmology, and general surgery. The Company's surgical hospitals also provide services such as diagnostic imaging, laboratory, oncology, pharmacy, physical therapy and wound care. Ancillary services are comprised of multi-specialty physician practices, urgent care facilities and anesthesia services. Unless the context otherwise indicates, Surgery Partners, Inc. and its subsidiaries are referred to herein as "Surgery Partners," "we," "us," "our" or the "Company."

As of September 30, 2024, the Company owned or operated a portfolio of 166 surgical facilities, comprised of 147 ASCs and 19 surgical hospitals in 33 states. The Company owns these facilities in partnership with physicians and, in some cases, health care systems in the markets and communities it serves. The Company owned a majority interest in 89 of these surgical facilities and consolidated 123 surgical facilities for financial reporting purposes.

The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for fair presentation of the Company's financial position and results of operations have been included. The Company’s fiscal year ends on December 31 and interim results are not necessarily indicative of results for a full year or any other interim period. The information contained in these condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 (the "2023 Annual Report on Form 10-K"). Certain prior year amounts have been reclassified to conform with the current year presentation.

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, as well as interests in partnerships and limited liability companies controlled by the Company through its ownership of a majority voting interest or other rights granted to the Company by contract to manage and control the affiliate's business. All significant intercompany balances and transactions are eliminated in consolidation.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and footnotes. Examples include, but are not limited to, estimates of accounts receivable allowances, professional and general liabilities and the estimate of deferred tax assets or liabilities. Actual results could differ from those estimates.

The Company's revenues generally relate to contracts with patients in which the performance obligations are to provide health care services. The Company recognizes revenues in the period in which its obligations to provide health care services are satisfied and reports the amount that reflects the consideration the Company expects to be entitled to receive. The contractual relationships with patients, in most cases, also involve a third-party payor (e.g., Medicare, Medicaid and private insurance organizations, including plans offered through the health insurance exchanges) and the transaction prices for the services provided are dependent upon the terms provided by or negotiated with the third-party payors. The payment arrangements with third-party payors for the services provided to the related patients typically specify payments at amounts less than the Company's standard charges. The Company continually reviews the contractual estimation process to consider and incorporate updates to laws and regulations and the frequent changes in managed care contractual terms resulting from contract renegotiations and renewals.

The following table presents a summary of revenues by service type as a percentage of total revenues:

Patient service revenues.  This revenue is related to charging facility fees in exchange for providing patient care. The fee charged for health care procedures performed in surgical facilities varies depending on the type of service provided, but usually includes all charges for usage of an operating room, a recovery room, special equipment, medical supplies, nursing staff and medications. The fee does not normally include professional fees charged by the patient’s surgeon, anesthesiologist or other attending physician, which are billed directly by such physicians to the patient or third-party payor. However, in several surgical facilities, the Company charges for anesthesia services. Ancillary service revenues include fees for patient visits to the Company's physician practices, pharmacy services and diagnostic tests ordered by physicians.

Patient service revenues are recognized as performance obligations are satisfied. Performance obligations are based on the nature of services provided. Typically, the Company recognizes revenue at a point in time in which services are rendered and the Company has no obligation to provide further patient services. Because the Company primarily performs outpatient procedures, performance obligations are generally satisfied same day and revenue is recognized on the date of service.

The Company determines the transaction price based on gross charges for services provided, net of estimated contractual adjustments and discounts from third-party payors. The Company estimates its contractual adjustments and discounts based on contractual agreements, its discount policies and historical experience. Changes in estimated contractual adjustments and discounts are recorded in the period of change.

Several states utilize supplemental Medicaid reimbursement programs for the purpose of providing reimbursement to providers to increase base rates to the levels that Medicare would have paid for the same service or for payments that offset a portion of the cost of providing care to Medicaid and indigent patients. These programs are designed with input from the Centers for Medicare & Medicaid Services (“CMS”) and are funded with a combination of state and federal resources, including, in certain instances, fees or taxes levied on the providers. We account for payments under these supplemental programs as variable consideration and estimate the amount using the most likely amount method. Reimbursement under these programs, including the recognition of variable consideration, is reflected in patient service revenues. Taxes or other program-related costs are reflected in other operating expenses.

Other service revenues. Other service revenues include management and administrative service fees derived from the non-consolidated facilities that the Company accounts for under the equity method, management of surgical facilities in which it does not own an interest, and management services provided to physician practices for which the Company is not required to provide capital or additional assets and other non-patient services. The management agreements typically require the Company to provide recurring management services over a multi-year period, which are billed and collected on a monthly basis. The fees derived from these management arrangements are based on a predetermined percentage of the revenues of each facility or practice and are recognized in the period in which management services are rendered and billed.

The following table sets forth patient service revenues by type of payor and as a percentage of total patient service revenues for the Company's consolidated surgical facilities (dollars in millions):

(1)Other is comprised of automobile liability, letters of protection and other payor types.

Accounts receivable from third-party payors are recorded net of estimated implicit price concessions, which are estimated based on the historical trend of the Company's surgical hospitals’ cash collections and contractual write-offs, and for the Company's surgical facilities in general, established fee schedules, relationships with payors and procedure statistics. While changes in estimated reimbursement from third-party payors remain a possibility, the Company expects that any such changes would be minimal and, therefore, would not have a material effect on its financial condition or results of operations.

Accounts receivable consists of receivables from federal and state agencies (under the Medicare and Medicaid programs), private insurance organizations, employers and patients. Management recognizes that revenues and receivables from government agencies are significant to the Company's operations, but it does not believe that there is significant credit risk associated with these government agencies. Concentration of credit risk with respect to other payors is limited because of the large number of such payors.

The Company recognizes that final reimbursement of accounts receivable is subject to final approval by each third-party payor. However, because the Company has contracts with its third-party payors and also verifies insurance coverage of the patient before medical services are rendered, the amounts that are pending approval from third-party payors are not considered significant. Amounts are classified outside of self-pay if the Company has an agreement with the third-party payor or has verified a patient’s coverage prior to services rendered. The Company's policy is to collect co-payments and deductibles prior to providing medical services. Patient services of the Company are primarily non-emergency, which allows the surgical facilities to control the procedures for which third-party reimbursement is sought and obtained. The Company does not require collateral from self-pay patients.

The Company's collection policies and procedures are based on the type of payor, size of claim and estimated collection percentage for each patient account. The Company analyzes accounts receivable at each of its surgical facilities to ensure the proper collection and aged category. Collection efforts include direct contact with third-party payors or patients, written correspondence and the use of legal or collection agency assistance, as required.

The Company uses the asset and liability method to account for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. If a carryforward exists, the Company makes a determination as to whether the carryforward will be utilized in the future. A valuation allowance is established for certain carryforwards when their recoverability is deemed to be uncertain. The carrying value of the net deferred tax assets assumes that the Company will be able to generate sufficient future taxable income in certain tax jurisdictions, based on estimates and assumptions. If our expectations for future operating results on a consolidated basis or at the state jurisdiction level vary from actual results due to changes in health care regulations, general economic conditions, or other factors, we may need to adjust the valuation allowance, for all or a portion of our deferred tax assets. Our income tax expense in future periods will be reduced or increased to the extent of offsetting decreases or increases, respectively, in our valuation allowance in the period when the change in circumstances occurs. These changes could have a significant impact on our future earnings.

The Company and certain of its subsidiaries file a consolidated federal income tax return. The partnerships, limited liability companies, and certain non-consolidated physician practice corporations also file separate income tax returns. The Company's allocable portion of each partnership's and limited liability company's income or loss is included in taxable income of the Company. The remaining income or loss of each partnership and limited liability company is allocated to the other owners.

The Company's effective tax rate was 18.9% for the nine months ended September 30, 2024 compared to (7.7)% for the nine months ended September 30, 2023. For the nine months ended September 30, 2024, the effective tax rate differed from the U.S. federal statutory rate of 21% primarily due to earnings attributable to non-controlling interests, an increase in the Company’s valuation allowance attributable to interest expense limitations, state tax expense, and a discrete tax expense of $1.5 million related to the valuation allowance impact of the Company’s impairment to an equity method investment. For the nine months ended September 30, 2023, the effective tax rate differed from the U.S. federal statutory rate of 21% primarily due to earnings attributable to non-controlling interests, an increase in the Company’s valuation allowance attributable to interest expense limitations, and discrete tax benefits of (i) $1.6 million related to the vesting of restricted stock awards and (ii) $15.8 million related to entity divestitures. Based upon the application of interim accounting guidance, the tax rate as a percentage of net income after income attributable to non-controlling interests will vary based upon the relative net income from period to period.

Goodwill represents the excess of the fair value of the consideration provided in an acquisition plus the fair value of any non-controlling interests over the fair value of net assets acquired and is not amortized. Additions to goodwill include amounts resulting from new business combinations and incremental ownership purchases in the Company's subsidiaries. A summary of the Company's acquisitions, disposals and deconsolidations for the nine months ended September 30, 2024 is included in Note 2. "Acquisitions, Disposals and Deconsolidations."

A summary of activity related to goodwill for the nine months ended September 30, 2024 is as follows (in millions):

A detailed evaluation of potential impairment indicators was performed as of September 30, 2024, which specifically considered recent changes in interest rates, inflation risk and market volatility. On the basis of available evidence as of September 30, 2024, no indicators of impairment were identified. Future estimates of fair value could be adversely affected if the actual outcome of one or more of the Company's assumptions changes materially in the future, including a material decline in the Company’s stock price and the fair value of its long-term debt, lower than expected surgical case volumes, higher market interest rates or increased operating costs. Such changes impacting the calculation of fair value could result in a material impairment charge in the future.

The Company records all derivatives on the balance sheet at fair value and any financing elements treated as debt instruments are recorded at amortized cost. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.

The Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

Each partnership and limited liability company through which the Company owns and operates its surgical facilities is governed by a partnership or operating agreement, respectively. In certain circumstances, the applicable partnership or operating agreements for the Company's surgical facilities provide that the facilities will purchase all of the physician limited partners’ or physician minority members’, as applicable, ownership if certain adverse regulatory events occur, such as it becoming illegal for the physician(s) to own an interest in a surgical facility, refer patients to a surgical facility or receive cash distributions from a surgical facility. Management believes the likelihood of an event occurring that would trigger such purchases was remote as of September 30, 2024. The non-controlling interests—redeemable are reported outside of stockholders' equity in the condensed consolidated balance sheets.

A summary of activity related to redeemable non-controlling interests is as follows (in millions):

The fair value of a financial instrument is the amount at which the instrument could be exchanged in an orderly transaction between market participants to sell the asset or transfer the liability. The Company uses fair value measurements based on inputs classified into the following hierarchy:

•Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.

•Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These may include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

•Level 3: Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, depending on the nature of the item being valued.

The carrying amounts reported in the condensed consolidated balance sheets for cash and cash equivalents, accounts receivable and accounts payable approximate their fair values under Level 3 calculations.

A summary of the carrying amounts and estimated fair values of the Company's long-term debt follows (in millions):

The fair values in the table above were based on Level 2 inputs using quoted prices for identical liabilities in inactive markets. The carrying amounts related to the Company's other long-term debt obligations, including finance lease obligations, approximate their fair values based on Level 3 inputs.

The condensed consolidated financial statements include the accounts of variable interest entities ("VIE") in which the Company is the primary beneficiary under the provisions of the Financial Accounting Standards Board's ("FASB") Accounting Standards Codification 810, "Consolidation." The Company has the power to direct the activities that most significantly impact a VIE's economic performance. Additionally, the Company would absorb the majority of the expected losses from any of these entities should such expected losses occur. As of September 30, 2024, the Company's consolidated VIEs consisted of nine surgical facilities and 26 physician practices.

The total assets (excluding goodwill and intangible assets, net) of the consolidated VIEs included in the accompanying condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023, were $86.2 million and $65.3 million, respectively, and the total liabilities of the consolidated VIEs were $57.9 million and $41.2 million, respectively.

In November 2023, the FASB issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures, which requires enhanced disclosures of significant segment expenses. The ASU is effective for annual periods beginning after December 15, 2023 and interim periods beginning after December 15, 2024. The amendments in this ASU must be applied retrospectively to all periods presented and early adoption is permitted. The Company is evaluating the impact of this ASU on its condensed consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures, which establishes new requirements for the categorization and disaggregation of information in the rate reconciliation as well as for disaggregation of income taxes paid. The ASU is effective for annual periods beginning after December 15, 2024 and interim periods beginning after December 15, 2025. The amendments in this ASU may be applied prospectively or retrospectively to all periods presented and early adoption is permitted. The Company is evaluating the impact of this ASU on its condensed consolidated financial statements.

•The Company acquired a controlling interest in six surgical facilities and several physician practices for aggregate cash consideration of $291.2 million, net of cash acquired, and non-cash consideration of $1.1 million, which consisted of a non-controlling interest in one of the Company's existing surgical facilities. In connection with these acquisitions, the Company preliminarily recognized non-controlling interests of $293.2 million, goodwill of $506.7 million and investments and advances to affiliates of $44.6 million related to an acquired surgical facility accounted for as an equity method investment.

•The Company acquired a controlling interest in two surgical facilities and one physician practice for aggregate cash consideration of $23.1 million, net of cash acquired, and non-cash consideration of $1.3 million, which consisted of non-controlling interest in one of the Company's existing surgical facilities. In connection with these acquisitions, the Company preliminarily recognized non-controlling interests of $20.4 million and goodwill of $39.7 million.

•The Company acquired a controlling interest in two surgical facilities and one in-development de novo surgical facility, which were previously accounted for as equity method investments, for aggregate cash consideration of $26.9 million, net of cash acquired. The Company also amended the operating agreement of a previously non-controlled surgical facility resulting in the Company obtaining a controlling interest in the facility. These transactions resulted in the consolidation of the previously non-consolidated entities. The previously held non-controlling interests were remeasured and recorded at fair value as of the dates of the transactions. The fair value measurement utilizes Level 3 inputs, which includes unobservable data. The acquisition date fair value of the previously held non-controlling interests was $27.3 million. As a result of increasing its ownership interest, the Company recognized a net loss of $7.1 million included in net loss on disposals, consolidations and deconsolidations in the condensed consolidated statements of operations for the nine months ended September 30, 2023. The net loss was determined based on the difference between the fair value of the Company's previously held non-controlling interests in the entities and the carrying values immediately prior to the transactions. In connection with the consolidation of these facilities, the Company preliminarily recognized non-controlling interests of $55.1 million and goodwill of $106.3 million.

•The Company acquired non-controlling interests in five surgical facilities and two in-development de novo surgical facilities for aggregate cash consideration of $50.2 million. The non-controlling interests were accounted for as equity method investments and recorded as a component of investments in and advances to affiliates in the condensed consolidated balance sheets. The Company also paid cash consideration of $21.0 million to acquire management rights from the prior management service provider related to four of the aforementioned surgical facilities. Management rights agreements are accounted for and recorded as a component of intangibles assets, net in the accompanying condensed consolidated balance sheets. The cash paid to acquire the management rights is presented as a component of other investing activities on the condensed consolidated statements of cash flows.

•The Company disposed of its non-controlling interests in one surgical facility, which was previously accounted for as an equity method investment, for cash proceeds of $2.0 million. In connection with this transaction, the Company recognized a pre-tax loss of $3.7 million, which is included in net loss on disposals, consolidations and deconsolidations in the accompanying condensed consolidated statements of operations for the nine months ended September 30, 2024.

•The Company sold a portion of its interests in one surgical facility for net cash proceeds of $2.5 million. As a result of the transaction, the Company no longer controlled the previously controlled surgical facility but retained a non-controlling interest, resulting in the deconsolidation of the previously consolidated entity. This transaction resulted in a pretax net gain on deconsolidation of $2.7 million, which is included in net loss on disposals, consolidations and deconsolidations in the accompanying condensed consolidated statements of operations for the nine months ended September 30, 2024. The net gain was determined based on the difference between the net cash proceeds plus the fair value of the Company’s retained interests in the entity and the carrying values of both the tangible and intangible assets of the entity immediately prior to the transaction.

•The Company sold its interests in one surgical facility for a nominal amount of cash proceeds. In connection with the sale, the Company recognized a pre-tax loss of $3.4 million, which is included in net loss on disposals, consolidations and deconsolidations in the accompanying condensed consolidated statements of operations for the nine months ended September 30, 2024.

•The Company recognized a pre-tax loss of $10.0 million related to an equity investment previously held at cost, which is included in net loss on disposals, consolidations and deconsolidations in the accompanying condensed consolidated statements of operations for the nine months ended September 30, 2024.

•The Company sold its interests in six surgical facilities for aggregate net cash proceeds of $30.4 million, a portion of which was held in escrow pursuant to the purchase agreements for such transactions. In connection with these transactions, the Company recognized a pre-tax gain of $26.9 million included in net loss on disposals, consolidations and deconsolidations in the condensed consolidated statements of operations for the nine months ended September 30, 2023.

•The Company disposed of its non-controlling interests in a surgical facility and an in-development de novo surgical facility, which were previously accounted for as equity method investments, for cash proceeds of $1.5 million. In connection with these transactions, the Company recognized a pre-tax loss of $13.7 million included in net loss on disposals, consolidations and deconsolidations in the condensed consolidated statements of operations for the nine months ended September 30, 2023.

A summary of long-term debt follows (in millions):

(1)Includes unamortized fair value discount of $1.5 million and $1.6 million as of September 30, 2024 and December 31, 2023, respectively.

As of September 30, 2024, the Company's availability on its $703.8 million senior secured revolving credit facility (the "Revolver") was $595.8 million (including letters of credit of $10.0 million). The increase in outstanding borrowings on the Revolver compared to December 31, 2023 was primarily due to the timing of acquisitions completed during 2024.

On April 10, 2024, the Company completed the issuance and sale of $800.0 million in aggregate principal amount of senior unsecured notes due 2032 (the "2032 Notes"). The 2032 Notes were issued pursuant to an Indenture dated April 10, 2024 by and among Surgery Center Holdings, Inc., certain subsidiaries of Surgery Center Holdings, Inc., as guarantors, and Wilmington Trust, National Association, as trustee. The 2032 Notes bear interest at an annual rate of 7.250% per year, payable semi-annually on April 15 and October 15 of each year, beginning on October 15, 2024. Proceeds from the sale of the 2032 Notes were used (i) to redeem all of the outstanding 6.750% senior unsecured notes due 2025 (the "2025 Notes") and the 10.000% senior unsecured notes due 2027 (the "2027 Notes," together with the 2025 Notes, the "Existing Notes"), (ii) to pay accrued interest on the Existing Notes through, but not including, April 25, 2024, (iii) to pay related fees and expenses in connection with the offering of the 2032 Notes and redemption of the Existing Notes and (iv) for general corporate purposes, including to fund future acquisitions.

In connection with this financing transaction, the Company recorded debt issuance costs and discount of $12.5 million, and a debt extinguishment loss of $2.8 million, which is included in loss on debt extinguishment in the accompanying condensed consolidated statements of operations for the nine months ended September 30, 2024.

On June 20, 2024, the Company entered into a first amendment (the "Amendment") to its credit agreement, dated as of December 19, 2023, by and among Surgery Center Holdings, Inc., the Borrower, Jefferies Finance LLC, as administrative agent and collateral agent, and the other financial institutions party thereto from time to time (the "Credit Agreement") to provide for a new tranche of term loans under the Credit Agreement in an aggregate principal amount of $1,400 million (the “2024 Refinancing Term Loans”), which 2024 Refinancing Term Loans replace or refinance in full all of the existing term loans outstanding under the Credit Agreement (as in effect immediately prior to the Amendment), all as further set forth in the Amendment. The 2024 Refinancing Term Loans mature on December 19, 2030. The 2024 Refinancing Term Loans bear interest at a rate per annum equal to (x) the forward-looking term rate based on Secured Overnight Financing Rate (“Term SOFR”) plus 2.75% per annum or (y) an alternate base rate (which will be the highest of (i) the prime rate plus 0.5% per annum above the federal funds effective rate and (ii) Term SOFR plus 1.00% per annum (which shall not be less than 1.00%)) plus 1.75% per annum. The 2024 Refinancing Term Loans amortize in equal quarterly installments of 0.25% of the aggregate original principal amount of the 2024 Refinancing Term Loans. Voluntary prepayments of the 2024 Refinancing Term Loans are permitted, in whole or in part, with prior notice, without premium or penalty (except a 1.00% call premium in the case of certain repricing events occurring prior to the sixth month anniversary of the effective date of the Amendment).

In connection with the Amendment, the Company recorded debt issuance costs and discount of $2.4 million, and a debt extinguishment loss of $2.3 million, which is included in loss on debt extinguishment in the accompanying condensed consolidated statements of operations for the nine months ended September 30, 2024. The loss on debt extinguishment includes the partial write-off of unamortized debt issuance costs and discounts.

The Company's operating leases are primarily for real estate, including medical office buildings, and corporate and other administrative offices. The Company's finance leases are primarily for medical equipment and information technology and telecommunications assets.

The following table presents the components of the Company's right-of-use assets and liabilities related to leases and their classification in the condensed consolidated balance sheets (in millions):

The following table presents the components of the Company's lease expense and their classification in the condensed consolidated statements of operations (in millions):

The following table presents supplemental cash flow information (in millions):

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps and interest rate caps as part of its interest rate risk management strategy.

During 2024 and 2023, such derivatives have been used to hedge the variable cash flows associated with existing variable-rate debt.

The key terms of interest rate swaps and interest rate caps outstanding are presented below:

As of September 30, 2024, the Company had three interest rate swaps with a total net notional amount of $1.2 billion. The interest rate swaps are pay-fixed, receive 1-Month Secured Overnight Financing Rate ("SOFR") (subject to a minimum of 0.75%) designated in cash flow hedging relationships and have a termination date of March 31, 2025.

As of September 30, 2024, the Company had two interest rate caps designated in cash flow hedging relationships with a total notional amount of $153.9 million. The interest rate caps each have a termination date of March 31, 2025. During the nine months ended September 30, 2023, the Company partially terminated a previously undesignated portion of one of its interest rate caps. In connection with the termination, the Company received $8.6 million, which is included as a component of operating activities in the condensed consolidated statements of cash flows for the nine months ended September 30, 2023.

On April 9, 2024, the Company entered into five deferred premium interest rate cap agreements, each with an effective date of March 31, 2025. The interest rate caps are designated in cash flow hedging relationships with a total notional amount of $1.4 billion. The deferred premium interest rate caps each have a termination date of December 31, 2028. These financial instruments are designed to limit the Company's interest rate exposure on its term loan concurrent with the expected maturity of positions held as of September 30, 2024. As of September 30, 2024, the Company's deferred premium interest rate caps had a total notional amount of $1.4 billion.

The pay-fixed, receive floating interest rate swaps did not meet the requirements to be considered derivatives in their entirety as a result of the financing component. Accordingly, the swaps are considered hybrid instruments, consisting of a financing element treated as a debt instrument and an embedded at-market derivative that was designated as a cash flow hedge.

Within the Company’s condensed consolidated balance sheets, the financing elements treated as debt instruments described above are carried at amortized cost and the embedded at-market derivatives are recorded at fair value. The cash flows related to the portion treated as debt are classified as financing activities in the condensed consolidated statements of cash flows while the portion treated as an at-market derivative are classified as operating activities. Within the Company’s condensed consolidated balance sheets, the interest rate caps are recorded at fair value. The cash flows related to the interest rate caps are classified as operating activities in the condensed consolidated statements of cash flows.

The Company's interest rate swap agreements, excluding the portion treated as debt, are recognized at fair value in the condensed consolidated balance sheets and are valued using pricing models that rely on market observable inputs such as yield curve data, which are classified as Level 2 inputs within the fair value hierarchy. The fair value of the interest rate caps is determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rise above the strike rate of the caps. The variable interest rates used in the calculation of projected receipts on the caps are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities. The interest rate caps are classified using Level 2 inputs within the fair value hierarchy.

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive income ("OCI") and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings, as documented at hedge inception in accordance with the Company’s accounting policy election. Amounts reported in accumulated OCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. Over the next 12 months, the Company estimates that an additional $19.0 million will be reclassified as a decrease to interest expense.

The following table presents the fair values of our derivatives and their location on the condensed consolidated balance sheets (in millions):

(1)Amounts were included in other current assets and other long-term assets on the condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023, respectively.

(2)Amounts were included in other current liabilities and other long-term liabilities on the condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023, respectively.

(3)Amounts related to the financing component of the pay-fixed interest rate swaps.

The following table presents the pre-tax effect of the interest rate swaps and caps on the Company's accumulated OCI and condensed consolidated statements of operations (in millions):

(1)Includes amortization of accumulated OCI related to de-designated and terminated interest rate swaps of $5.3 million and $16.0 million for the three and nine months ended September 30, 2023, respectively. There were no corresponding amounts for the three and nine months ended September 30, 2024.

Basic and diluted earnings (loss) per share is calculated based on the weighted-average number of shares outstanding in each period and dilutive stock options, unvested shares and warrants, to the extent such securities exist and have a dilutive effect on earnings (loss) per share. A reconciliation of the numerator and denominator of basic and diluted earnings (loss) per share follows (dollars in millions, except per share amounts; shares in thousands):

(1)The impact of potentially dilutive securities for all periods was not considered because the effect would be anti-dilutive.

A summary of other current liabilities was as follows (in millions):

The Company is subject to claims and legal actions in the ordinary course of business, including claims relating to patient treatment, employment practices and personal injuries. The Company maintains professional, general and workers' compensation and cyber liability insurance in excess of self-insured retentions, through third party commercial insurance carriers. Although management believes the coverage is sufficient for the Company's operations, some claims may potentially exceed the scope of coverage in effect. Plaintiffs in these matters may request punitive or other damages that may not be covered by insurance. The Company is not aware of any such proceedings that are reasonably possible to have a material adverse effect on the Company's business, financial position, results of operations or liquidity. Total professional, general and workers' compensation claim liabilities as of September 30, 2024 and December 31, 2023 were $18.1 million and $18.2 million, respectively. Expected insurance recoveries of $10.2 million as of both September 30, 2024 and December 31, 2023 are included as a component of other current assets and other long-term assets in the condensed consolidated balance sheets.

The Company currently operates in two major lines of business that are also the Company's reportable operating segments - the operation of surgical facilities and the operation of ancillary services. The Surgical Facility Services segment includes the operation of ASCs, surgical hospitals and anesthesia services. The Ancillary Services segment consists of multi-specialty physician practices. The "All other" line item primarily consists of amounts attributable to the Company's corporate general and administrative functions.

The following tables present financial information for each reportable segment (in millions):