Surgery Partners, Inc. (SGRY) Q4 2018 Earnings Conference Call Transcript

SGRY earnings call for the period ending December 31, 2018.

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Surgery Partners, Inc.  (NASDAQ:SGRY)
Q4 2018 Earnings Conference Call
March 13, 2019, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

See all our earnings call transcripts.

Prepared Remarks:

Operator

Greetings, and welcome to Surgery Partners Fourth Quarter 2018 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

It's now my pleasure to introduce your host, Tom Cowhey, Chief Financial Officer. Thank you. You may begin.

Tom Cowhey -- Executive Vice President & Chief Financial Officer

Good morning, and welcome to Surgery Partners fourth quarter and year-end 2018 earnings call. This is Tom Cowhey, Chief Financial Officer. Joining me today is Wayne DeVeydt, Surgery Partners' Chief Executive Officer. As a reminder, during this call, including during the Q&A portion of the call following our prepared remarks, we will make forward-looking statements. Risk factors that may impact those statements and could cause actual future results to differ materially from currently projected results are described in this morning's press release and under the heading Risk Factors and our most recent Annual Report on Form 10-K, and in the other reports we filed with the FSC. The Company does not undertake any duty to update such forward-looking statements.

Additionally, during today's call, the Company will discuss certain non-GAAP measures, which we believe can be useful in evaluating our performance. One such non-GAAP measure we are introducing for this quarter is adjusted revenue, as Surgery Partners recently implemented Accounting Standard 606. This standard essentially combines the previous expense provision for doubtful accounts into our net revenue presentation. Net revenues are thereby reduced with a corresponding offset through the elimination of bad debt expense, with no net impact to our adjusted EBITDA or bottom line financial results. Adjusted revenue preserves the previous presentation for comparability purposes.

The presentation of this and all additional information should not be considered in isolation or as substitute for results prepared in accordance with GAAP. A reconciliation of these measures can be found in our earnings release, which is posted on our website at surgerypartners.com and on our most recent Annual Report, when filed.

With that, I'll turn the call over to Wayne. Wayne?

Wayne S. DeVeydt -- Chief Executive Officer

Good morning. Thank you, Tom, and thank you all for joining us today. We have a lot to cover this morning. First, I'd like to review some highlights from our fourth quarter results. I will then provide an overview of the strategic initiatives that we implemented in 2018 to drive sustainable double-digit long-term adjusted EBITDA growth beginning in 2019. Finally, I'll turn the call over to Tom to provide further details on the financials and our 2019 outlook.

Starting with the quarter. This morning, we reported fourth quarter 2018 adjusted revenues of $0.5 billion, and adjusted EBITDA of $73.3 million, primarily as a result of our strategic initiatives that continue to show solid progress in the fourth quarter of 2018. As we look deeper into the quarter, adjusted EBITDA grew by 14.7% over the fourth quarter of 2017. This represents the first quarter where National Surgical Healthcare results were fully reflected in the prior-year period.

Same-store revenue increased by 7.4% from the prior-year quarter. Adjusted EBITDA margins improved by 100 basis points versus the prior-year quarter, with adjusted EBITDA margins reaching 14.9%, and this improved margin profile occurred with government payer mix that increased by nearly 2% when compared with our prior-year quarter. These trends, including our second consecutive quarter same-store case volume improvement, when combined with improving margins, continue to be encouraging, providing us with the expected momentum as we build sustainable platforms and position our Company for future growth.

Turning to our long-term strategy. Over the past year, we've been focused on reinforcing and building upon what we do best. Operating high quality, short-stay surgical facilities. Throughout 2018, we've taken a data-driven approach in analyzing strategic opportunities and challenges across our portfolio, and divesting or closing those assets that are not aligned with our growth goals. We also made substantial investments in platform consolidation, which eliminates execution distractions, provides data analytics that enable agility in decision making and effectively leverage our platforms for G&A efficiencies. And finally, we invested in our business with a priority placed on organic volume and revenue growth, along with margin expansion and capital deployment focused on high-growth assets.

Some key accomplishments in 2018. We pruned our asset base of non-strategic lower growth assets, representing a total of over $100 million in annualized revenue. We recharged our organic growth engine, resulting in same store facility revenue growth in Q3 and Q4 of 11.4% and 7.4% respectively. This is a result of both improved rates and case volume, with Q4 representing our largest same store case volume as compared to the previous six quarters.

We leveraged our scale, resulting in improved results for our physician partners and margin expansion for our shareholders. This includes sustainable run rate supply chain savings, along with a 10% plus reduction in corporate headcount net of our reinvestments in the business. We invested in our infrastructure, which includes but is not limited to 79% of our surgical facilities and clinical practices migrated to our in-state patient accounting platforms. 95% of our surgical facilities and clinical practices migrated to a common claims clearinghouse. And 84% of surgical facilities integrated into a centralized data warehouse. We also rebuilt our

M&A pipeline with over $100 million in capital deployed in 2018 at a sub-7 effective multiple.

And finally, we took these actions while maintaining a strong focus on clinical quality. As an example, in February of this year, CMS updated its overall hospital quality star ratings, recognizing 293 or less than 10% of hospitals with five-star ratings. We are pleased to report that four of our surgical hospitals received a five-star rating in the most recent period, further confirmation of our commitment to clinical excellence. While we are proud of these many accomplishments, we also realize that sustainable long-term growth requires a (inaudible) focus on execution and a proactive approach to eliminating headwinds that could impede our growth goals.

While there were several headwinds impacting our growth in 2018, one headwind of particular importance to our Company relates to our ability to resolve matters that are the subject of the civil investigative demand letter we received from the federal government in October of 2017. As previously disclosed in our SEC filings, the investigative demand letter was for documents and information dating back to January 1, 2010, relating to medical necessity of certain drug tests conducted by the Company's physicians, and submitted to laboratories owned and operated by the Company.

We are currently in discussions with the government about resolving potential claims relating to these matters. Based on those discussions, which are still ongoing, we recorded a charge of $46 million in the fourth quarter related to these matters. We currently expect this charge to be sufficient to cover our potential settlement with the government related to these matters, and certain related legal expenses.

It is important that we put this matter behind us, so we can ensure our focus is in providing exceptional clinical care to our patients and services to our physician partners and associates. This investigation relates to a chapter of our past that we are looking forward to closing shortly with federal investigators, as we continue to improve on our culture of innovation, compliance and accountability.

Of course, 2018 was just a start of building our new culture. This is an exciting time for our Company, and I feel privileged to be part of this great management team at this transformational period. I'm especially encouraged with our early track record of execution, which we believe will be further complemented with the addition of Eric Evans, as our Chief Operating Officer, effective April 1st. Eric brings over 15 years of industry experience to our company. And will play a key role in continuing to implement our growth strategy and deliver value to our stakeholders.

Before I turn the call over to Tom, I would like to close with some important initiatives that we began in 2018 that are expected to begin to create meaningful long-term shareholder value beginning in 2020 and beyond. As you're all aware, de novo investments are a highly accretive way of growing organically, but generally have a long digestive period from initial investment to initial returns on investment.

In 2018, we began this journey with two of the largest de novo investments in our Company's history. The first of these two investments is the Idaho Falls Community Hospital. This state-of-the-art, 88-bed facility will include emergency room and ICU services, and will complement the broader healthcare ecosystem that we have built in the greater Idaho Falls community and surrounding territories.

The second of these investments is the Villages Ambulatory Surgery Center, which is located in the nation's premier active adult retirement community, just northwest of Orlando, Florida. In partnership with the Villages Health, the largest multi-specialty practice group in the Tri-County area, Surgery Partners will be the exclusive owner and operator of the Villages multi-specialty ASC, serving its over 120,000 residents and growing and supporting the Villages help more than 40,000 active patients.

Both of these investments are expected to open no later than the first quarter of 2020, and to be significant contributors to our long-term organic growth.

With that, let me turn the call back over to Tom for an introduction and overview on our fourth quarter financial results and initial 2019 outlook. Tom?

Tom Cowhey -- Executive Vice President & Chief Financial Officer

Thank you, Wayne. Today, I'll spend a few minutes on our fourth quarter and year-end 2018 financial performance, starting with some of our key revenue drivers, then moving onto adjusted EBITDA, cash flows and our 2019 outlook.

Starting with the top line. We entered the year with strong revenue growth achieving approximately $500 million of fourth quarter adjusted revenues, up 8.5% as compared to the prior-year quarter. Our full-year adjusted revenues rose to just over $1.8 billion, representing year-over-year growth of nearly 35%, primarily related to the August 2017 acquisition of National Surgical Healthcare. Surgical cases also increased to approximately 137,000 in the quarter, and we ended the year just below 521,000 cases representing year-over-year growth of 11.2%.

On a same store basis, total company revenue was up 7.4% from the prior-year quarter. For the full year, our same store revenue was up 5%, driven by higher net revenue per case, partially offset by a small decline in volumes. As we reflect on our quarterly trends in cases and revenues, we are quite pleased with the progress we have made regarding our strategic initiatives around physician recruitment. In 2018, we recruited over 500 new physicians that began using our surgical facilities to provide services to their patients. The impact of these new physicians is particularly evident when comparing our first half volumes to our second half as same store volumes improved from a net decline of 2.7% in the first half of 2018 as compared to second half performance of 1 percentage point of volume growth nearly a 4 percentage point swing.

Turning to operating earnings. Our fourth quarter 2018 adjusted EBITDA was $73.3 million, a 14.7% increase over the comparable period in 2017, bringing our full-year result to $234.8 million, consistent with the high end of our previous guidance range. Our fourth quarter adjusted EBITDA margin improved to 14.9% from 13.9% as compared to the prior-year period. And on a full-year basis, our adjusted EBITDA margin also increased by a point to 13.3%.

During the quarter, we recorded approximately $8.4 million of transaction, integration and acquisition costs, including over $3 million of costs associated with recent headcount actions and additional one-time cost to implement some of our 2019 cost savings initiatives, as we continue to integrate legacy NSH processes under one corporate umbrella.

Over the last several quarters, we have been transparent with investors, as we focused management time and effort on our core short-stay surgical facility business, and also shifted focus away from our Ancillary and Optical segments.

We explored strategic alternatives for our Optical segment and completed the sale of two of those component businesses in 2018. We also closed or consolidated 16 physician practices and brought much of our lab business in network. Consistent with this strategic shift, and our current outlook for these businesses, in the fourth quarter of 2018, we took a $74.4 million non-cash goodwill write-off in our Ancillary and Optical segments.

Further, as Wayne discussed, we also recorded a charge of $46 million relating to pending matters with the federal government. We are pleased that we continue to make progress to eliminate distractions at our Ancillary and Optical businesses, so we can continue to focus management time and effort on the core elements of our growth strategy.

Moving on to cash flow and liquidity. At the end of the fourth quarter, the Company had cash balances of approximately $184 million, and approximately $71 million of availability under our revolving credit facility. Of note, during the fourth quarter, Surgery Partners had net operating cash inflow, defined as operating cash flows less distributions to non-controlling interests, of $16.6 million. We deployed approximately $52 million for the acquisition of a majority interest in three ASCs, and we used approximately $62 million for payments on our long-term debt.

Based on the current status of our discussions with the federal government, we project that we will pay any potential settlement out of currently available resources. The ratio of total net debt to EBITDA at the end of 2018, calculated under the Company's credit agreement, declined sequentially to approximately 7.7 times, primarily as a result of higher trailing 12-month credit agreement EBITDA and the positive impact of October acquisitions net of divestiture activity.

The Company has an appropriately flexible capital structure, with no financial covenant on the term loan or our senior unsecured note. We continue to project that the Company's total net debt-to-EBITDA ratio should naturally decline over time, as our business continues to grow, but may fluctuate on a quarterly basis based on timing of cash flows.

I'd now like to turn to our 2019 outlook. In considering our outlook, it is first important for investors to understand some of the headwinds and tailwinds that are facing our business in 2019. The primary headwind that we considered was that the Company undertook substantial portfolio optimization efforts in 2018. All-told, we projected entities that are not part of our current portfolio would have achieved over $100 million of 2018 adjusted revenue, and as a group, they contributed positively to our 2018 adjusted EBITDA. Those revenues and profits will not recur in 2019.

Some of the tailwinds that we considered for next year include, improving same store volume and revenue growth dynamics in the second half of 2018, that we expect to persist and accelerate into 2019; the annualization of our 2013 acquisitions, including three ASCs that we acquired in late October; the expected impact of our efficiency efforts, including insurance consolidations and completed headcount actions; and the expected benefit of our ongoing procurement and revenue cycle efforts.

As we consider these headwinds and tailwinds, we believe that our year-end 2018 adjusted EBITDA represents a reasonable baseline of which we can grow at a double-digit rate in 2019. We also project that we will grow net revenues by low single-digit rates in 2019, despite divesting nearly $100 million of annualized revenue from our 2018 reported results. When normalized for these divested revenues, our 2019 growth is projected to be high single-digits.

As a matter of prudence, we do not include the impact of unidentified M&A in our forward outlook, as we want our teams focused on deals that meet our long-term strategic objectives, not short-term earnings goal.

Also, as Wayne indicated, we do not anticipate that our de novo facilities in Idaho Falls and at the Villages will open until the first quarter of 2020. In the event that these facilities open in 2019, we plan to exclude their operating results from our adjusted EBITDA presentation.

One final thought on our 2019 outlook. While we do not provide quarterly guidance, the impact of our portfolio optimization efforts will be more prominent in the first quarter of 2019, resulting in mid single-digit year-over-year adjusted EBITDA growth rates. We project that this impact will subside as we progress throughout the year, resulting in accelerating year-over-year growth rate by the fourth quarter.

Our new management team spent the last year executing on a new strategy, and it's exciting to be able to see the beginning of those efforts in our fourth quarter results, and our 2019 outlook. Same store volumes are growing again, cost efficiencies are manifesting themselves in our results, our M&A efforts are paying dividends, and we are planting new flags with our de novo activity, a combination that we project will enable 2019 to be the first year of multiple years of double-digit adjusted EBITDA growth.

With that, we'll open the call for Q&A. Operator?


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Questions and Answers:

Operator

Thank you. (Operator Instructions) Our first question is from Brian Tanquilut with Jefferies. Please proceed with your question.

Jason Plagman -- Jefferies -- Analyst

Hey, guys, it's Jason Plagman on for Brian this morning. First question on -- embedded in your 2019 outlook, can you just comment on what you're thinking as far as same store revenue growth, you know, should we expect similar performance to kind of the second half and then some acceleration in the second half of '19, or you know, just kind of how you're thinking about trajectory of organic growth in 2019?

Wayne S. DeVeydt -- Chief Executive Officer

Hey, Jason, good morning. Yeah, if you think about -- as we talked about, what we see as the parameters for organic growth, normally you would target 2% to 3% in rate and then 2% to 3% in volume. Obviously, we're very encouraged at what we saw from a volume perspective and especially the trends in the back half of '18. So I would actually anticipate our volumes probably to be more to the upper end of that 2% to 3% over time. And then on the rate side, if you remember, if you look at our book of business, a substantial part of our book is still Medicare related and so obviously the ability to be at the 2% to 3% within that range. You know, probably close to the higher end over time. But again, that's as we renew commercial contracts, it takes about three years to get fully through the cycle. So I wouldn't necessarily take what you saw in third and fourth quarter because there was some low-hanging fruit for us to go after very aggressively. But I think, you know, long term sustainable rates you should think about for '19 and beyond is kind of in that 2% to 3% rate, 2% to 3% in volume, so 4% to 6% range.

Tom Cowhey -- Executive Vice President & Chief Financial Officer

Jason, it's Tom. Couple of things I just might add, you know, mix matters. And as you look at our mix in 2018, you know, some of the places where we felt a little bit short relative to our expectations were in some of those higher, lower rate, but more frequent cases. So kind of high volume, low dollar cases. And so as that some of that volume comes back, you might see a little bit of a negative impact on the rate line there. But, you know, that would be incorporated in and consistent with our volume guidance that we talked about.

The second thing I would point out is that as you look at the business and you look at the way that we've historically reported same store, we actually include the Ancillary revenues in the numerator of that, whereas they have an adverse impact because there's not really surgical case volume associated with them. As we go into 2019, we're evaluating whether or not we actually might pull those out and strip this down, so it's more of a surgical same store metric for investors.

Jason Plagman -- Jefferies -- Analyst

Okay, that's helpful. And then just any update on the physician recruiting insider. Are you still adding headcount and investing there or are you comfortable with the level of recruiting heads that you have right now?

Wayne S. DeVeydt -- Chief Executive Officer

It's a great question. I would say, right now, we actually like the run rate of our current headcount that we have. We're not looking to add at this point in time. As you know, there's -- you always get to a point of diminishing returns. We're not sure we're at that point yet. But this will be an important year for us. The trends in the back half of the year were quite substantial with the number of new physicians we recruited. And so we'd like to see if those trends continue in the first quarter or if they start to level off. But I'd say at this point, I think we're going to go into this year with kind of full run rate impact now, what we think the right headcount level is. As you know, we ramped up that recruiting team throughout the year last year, so we'll get a little bit of a headwind from the G&A -- for them for this year. But clearly, we're getting more than an offset, a tailwind from the volume that's coming from the physicians that are being recruited. But for now, we're going to watch and see the first quarter. If those trends show there's continued momentum, we may hire more.

Jason Plagman -- Jefferies -- Analyst

Thanks, guys.

Operator

Our next question is from Chad Vanacore with Stifel. Please proceed with your question.

Chad Christopher Vanacore -- Stifel, Nicolaus & Company, Incorporated, Research Division -- Analyst

All right, thanks. So, in 2018, you did roughly $100 million acquisitions, should we expect that to be about the same level in 2019?

Tom Cowhey -- Executive Vice President & Chief Financial Officer

Hi, Chad, good morning. And I appreciate the question. We're going to still target in the $80 million to $100 million, you know, annually over time is what we plan to deploy. I would say that we're finding that assets that are available in the market in some cases are becoming a little more richer. I don't think we're a surprise anymore to people. So we're going to be very selective on those transactions. But I would say, over time, that that's our targeted range is the $80 million to $100 million, and, you know, we're going to continue to move down that path this year. We've got pipeline already, we've got some LOI signed. We'll see if we get them over the finish line. But that's where we're at.

Chad Christopher Vanacore -- Stifel, Nicolaus & Company, Incorporated, Research Division -- Analyst

So you mentioned that you're seeing assets a little bit richer. But I think in your prepared comments, you said that you're seeing assets or did acquisitions that are sub-7 times the EBITDA. Is that right? And how does that compare with historical?

Wayne S. DeVeydt -- Chief Executive Officer

Yes. Chad, that's great question. Yes. The items that we transacted on last year, we finished at a sub-7 multiple, which we find highly attractive. So we felt very good about the assets that we got and we feel very good about the markets in which we targeted. What I'm referring to where we're starting to see some of the valuations creep up -- is on what I'll call a pure play specialties in MSK. I think we were a little bit of a secret last year, and people weren't paying attention and we got into some of these markets and we're finding that those valuations are moving up more into the 8 and 9 range, and not that we don't still find that attractive, especially relative to our current multiple, but we still think there's a lot of ASCs, over 5,000 ASCs out there and many of those are in the attractive specialties we like. So we'll be -- we'll just be selective. We find that generally we get better multiples on non-brokered deals than brokered deals. And we like the idea of not just sitting in a tree and waiting for the opportunities to come but actually get out and hunt for those opportunities. So we've got a nice pipeline of both in market as well as brokered opportunities in front of us. But we're going to continue to be selective like we were last year. And just as a reminder, you know, last year we targeted $80 million to $100 million, but really wasn't until October 31st that we got half of that done because we just -- we just weren't liking where some of the multiples were falling out. So I think we'll continue to target that. I don't see that changing, but we'll be -- we'll be very selective.

Chad Christopher Vanacore -- Stifel, Nicolaus & Company, Incorporated, Research Division -- Analyst

All right. And on the flip side of the acquisitions, you've got dispositions. You said you disposed off about $100 million revenues in 2018. Can you give us an idea what you did in the fourth quarter? I think you had a couple surgical hospitals that you're going to deal with, and then what's left to be done in 2019?

Wayne S. DeVeydt -- Chief Executive Officer

So, I'll let Tom talk about the two surgical hospitals, because those actually were disposed off on the last day of the year and actually represent the vast majority of that $100 million, I'll let Tom give you some statistics there. But I would tell you, relative to going into 2019 and pruning activity, the good news, Chad, is that we've -- we've really done what I would call the heavy lift in '18, those items that weren't core to our long term strategic growth goals. Now, in 2019, I'll never say that we're done with pruning, but now our shift moves more into the -- are we better off owning the asset or not? Can we grow it at a rate faster than what we could grow other assets if we redeploy the capital differently? So now I would say, we're moving into what a mature pruning organization should look like. And so I do think there could be some in in '19. I would tell you, I don't have anything specifically targeted right now. But I will tell you, we are looking at our entire portfolio around optimization strategies, but very different than what we did in '18. Tom, do you want to comment a little bit about the about the revenue and in particular those two facilities?

Tom Cowhey -- Executive Vice President & Chief Financial Officer

Yeah, absolutely. As you look at the, you know, we did have two surgical hospitals that we either closed or sold essentially on the last day of the year. And so that was a -- that was a pretty large effort. We're really proud of what the teams were able to accomplish there and how they were able to accomplish it. But those two facilities in and of themselves were nearly $70 million worth of calendar year revenue and were positive contributors to the to the enterprise, but they were below our target margin range. You know, the remainder we've talked about the physician practices that we closed, we've talked about the, you know, the -- we talked about the ASCs that we either closed or sold. You know, we -- all of those things contributed to the kind of the remainder and they -- as we look at that, we wanted to highlight for investors, particularly as you look at our revenue guidance, you know, it probably it's more robust than it looks. And we wanted to make sure that we quantified that for investors, so that they could understand that while we think this is the right thing for the enterprise, that it makes some of the metrics look a little funny.

Chad Christopher Vanacore -- Stifel, Nicolaus & Company, Incorporated, Research Division -- Analyst

All right, just one more question on the changes and closures. How does that's going to affect your rent going forward?

Wayne S. DeVeydt -- Chief Executive Officer

Pardon me? How is it going to affect the what?

Chad Christopher Vanacore -- Stifel, Nicolaus & Company, Incorporated, Research Division -- Analyst

The rent -- your leased assets?

Wayne S. DeVeydt -- Chief Executive Officer

Are you talking about the lease accounting standards that we'll implement in the first quarter?

Chad Christopher Vanacore -- Stifel, Nicolaus & Company, Incorporated, Research Division -- Analyst

No, I'm just talking about your quarterly lease payments.

Wayne S. DeVeydt -- Chief Executive Officer

I don't think it should have any impact on that. Are you talking about the change in accounting standard? I just want to make sure I understand your question.

Chad Christopher Vanacore -- Stifel, Nicolaus & Company, Incorporated, Research Division -- Analyst

Yes, just getting -- you pay your rental expense every quarter and every month. You sold and closed a few hospitals. So how does that affect your rent going forward?

Wayne S. DeVeydt -- Chief Executive Officer

Though there is no impact, we actually don't own those facilities. And so those have been shut down. So there is no impact on future rental commitments. Where we do have a rental commitment in the future was on our Chicago facility, that was NSH's historical headquarters. As you know, we closed and consolidated that facility last year. We recently signed a sublet arrangement, that arrangement goes through 2023. And we were able to get the vast majority of the cash flow on the subletting arrangement back into our pockets prospectively. So no real impacts on any of the facilities we closed at 12/31. The only one that has a kind of a net negative arbitrage for us in the short term is the Chicago facility, and that's a short-term cash flow arbitrage.

Chad Christopher Vanacore -- Stifel, Nicolaus & Company, Incorporated, Research Division -- Analyst

All right. Thanks for taking the questions.

Wayne S. DeVeydt -- Chief Executive Officer

Thanks, Chad.

Operator

Our next question is from Ralph Giacobbe with Citigroup. Please proceed with your question.

Ralph Giacobbe -- Citigroup Inc, Research Division -- Analyst

Thanks. Good morning. Just hoping you could talk a little bit more about the payer mix dynamics in the quarter. I think you talked about a 200 bps deterioration, and I guess a little bit surprising just given seasonality and sort of the whole argument around high deductible health plans that would seemingly impact more on the commercial side. So any commentary there and maybe what the outlook is there for 2019? Thanks.

Tom Cowhey -- Executive Vice President & Chief Financial Officer

Hi, Ralph, thanks for the question, and good morning. It's an interesting trend that we don't necessarily predict is going to slow, as we've talked about, as deductibles continue to rise for consumers through commercial payers, we think this is a dynamic that will continue to push over time and actually put more heavy weight, while fourth quarter was still our largest commercial mix throughout the year, it wasn't as large as what we've seen historically, right by two points. And so I'm not so sure this is something that's going away. I think this is kind of the new trend that I still think commercial will be much heavier for us in Q4 like it's been historically, but I think you'll continue to see the Medicare mix grow. The other thing I would highlight is we are being intentional in our behaviors. We like the opportunity to service, you know, customers and physicians regardless of, you know, them having commercial or Medicare backgrounds. We still believe similar to when I was at Anthem, that you have to learn to participate in the federal government programs. And these are programs, over time, if done well, can become quite profitable to your organization. And so we've also got a very intentional shift to not only continue to go aggressively after the commercial members, but we're equally interested in filling our facilities and bringing this additional volume, and quite candidly, our clinical quality and services to those customers. So I don't think you'll see that shift necessarily change and our efforts are equally targeted.

Ralph, it's Tom. You know, the -- while the dynamics in the quarter were a little bit odd, I think, you know, Wayne pointed to the right one, which is, you know, incremental volume above your expectations, no matter where it comes from, is always a good thing. And so that's part of what I think you see in the quarter. Just higher volumes are always good or better, as you know, if you have unused capacity. As you look at the quarterly dynamics, we are a little bit down year-over-year on the commercial side and a little bit up on the government side. But as you look at the year-to-date dynamics, commercial is actually still up, you know, close to a point based on the numbers that I have. You know, it's just really what happened inside the fourth quarter that is a little bit unusual.

Ralph Giacobbe -- Citigroup Inc, Research Division -- Analyst

Okay. All right, that's -- that's helpful. And then just my follow up, I just want to clarify the adjusted EBITDA growth guidance of low single or low double digits. It that after reported for 2018, then normalized for divestiture and maybe just given all the moving parts. Can you just give us what the 2018 EBITDA baseline that you're using that sort of ties to that low double-digit growth guidance? Thanks.

Wayne S. DeVeydt -- Chief Executive Officer

It's our printed results, Ralph. You know, I think that we as we think about it, you know, the $100 million of annualized revenues had a positive impact. And so, you know, which is worth probably a couple of points in and of itself. And so as you think about where you want to be inside that range, I'd make sure that you give that some consideration. But, you know, we're using our current baseline of 2018 reported results of $234.8 million.

Ralph Giacobbe -- Citigroup Inc, Research Division -- Analyst

Okay. That's -- that's helpful. And then lastly, I know you said you pruned $100 million of revenue, you said EBITDA was positive. Are you not -- are you not breaking out what the actual contribution was of EBITDA for those divested or so closed?

Wayne S. DeVeydt -- Chief Executive Officer

That's correct, Ralph. It's really our preference not to break it out. As you can probably imagine, we continue to have ongoing dialogue regarding other assets we're at least evaluating and we don't want to actually negotiate against ourselves on anything in a public call. But what we will say is, these items did contributed positively, net positive, some actually were net negative. But many assets when we add them all altogether were a net positive contributor to our EBITDA.

Tom Cowhey -- Executive Vice President & Chief Financial Officer

They were below the average margin and certainly below our target.

Ralph Giacobbe -- Citigroup Inc, Research Division -- Analyst

Okay. Thank you very much.

Operator

Our next question is from Ana Gupte with SVB Leerink. Please proceed with your question.

Ana A. Gupte -- Leerink Partners LLC, Research Division -- Analyst

So good morning. On the 2% to 3% volume growth that you're projecting same store going forward, just following up on -- on Ralph's question, I guess, beyond the mix from -- can you firstly -- can you tell us what is Medicare versus Commercial in your expectations? And then also, how much of it is coming because you have now rehauled your surgical workforce and that's giving you some company-specific tailwinds in the near term relative to more broadly from a secular standpoint. Now what should we think about for growth rates in this whole ASC space and will there be any point where there is an inflection because of bundling or other reimbursement models that you might be exploring, both you and Tom coming from the payer space?

Tom Cowhey -- Executive Vice President & Chief Financial Officer

Ana, as you look at the mix, how that ultimately plays out is that we expect that we'll see higher government mix early in the year, because of deductible shift. And then we'll see more robust commercial mix, as we get later into the year. We're not giving specific guidance on kind of what it is that we assumed on that. But we're still looking at, as Wayne said, we think that 2019 is a good year for the model, as we've outlined it, two to three points of volume growth and two to three points of rate. Ultimately, how that mix develops over the course of the year will be important, in particular to the rate category. And I would say that there's two dynamics in there. It's the payer mix dynamic, but it's also just the category-specific or the specialty mix dynamic, as well, where we are anticipating that we will see a little bit higher mix this year of some of those higher volume, lower net revenue per case items that really underperformed in 2018 relative to our expectations. I don't know whether, Wayne, you want to talk specifically about some of the bundling efforts?

Wayne S. DeVeydt -- Chief Executive Officer

Yes. So, Ana, I really appreciate the question on the bundling, and in particular, the idea that we can now strategically start to really focus on what we do best, which is short-stay surgical facilities. And by eliminating many of these other distractions, I'll share some of these early -- some early data points that I find really encouraging for the Company and what the team's been doing so far. But if you were to look at the number of total joints that we did in 2017, we averaged about 15 total joints a quarter. So not very inspiring, smaller number. In 2018, we rolled out a new program midyear using bundling as an opportunity to save the payers a fair amount of money and move many of these procedures from a more costlier setting to a less cost setting in our case, and to give you a statistic, our average total joints we did in 2018 went from 15 a quarter in '17 to over 60 a quarter in '18. But we didn't roll that program until midyear. So really put in perspective, we did over 100 in the fourth quarter alone of this past year, in terms of total joints. Now, I wouldn't run rate fourth quarter because, keep in mind, that's when many deductibles are met and many individuals are going in from the commercial side as well.

But I think it gives you an indication of these initiatives take time to build. And they're kind of like a small snowball that gets -- that gets going down a hill and it really starts to create momentum. And so, you know, as you can imagine, for us to average 60, that means we're really back and loaded on how many total joints we did in the back half of the year with over 100 plus in the fourth quarter. So we like that this momentum can really continue. We piloted this program in four markets in 2018 and we are now rolling it out to four additional markets in '19. And if we continue to like how this goes, we'll continue to expand. Right now, as you know, you've got to have the equipment to roll these out. You've got to have the space to roll these out and you've got to have the block time to do this. So we wanted to make sure we could do it well and do it right. But we're really encouraged at what we can do with bundling at this point and look forward to seeing how this impacts not only '19, but 2020 and beyond.

Ana A. Gupte -- Leerink Partners LLC, Research Division -- Analyst

That's helpful, so just on the bundling, that's really encouraging. To what degree are the payers concerned more about -- how much is it the reimbursement angle relative to safety concerns, perhaps because, you know, in a inpatient hospital, bundled is like a natural post-acute provider and it's not a direct discharge back to home, if you will. And then how much -- how does that going to correlate with any new de novos and these new models that are coming out with cash sweeps and some short-term stays? Is that helping NPS scores for either you or other players?

Wayne S. DeVeydt -- Chief Executive Officer

Yes, so, first of all, what I would say is, to date we've kept our bundles to a very finite level, same day. And so for us, basically recovering facility fee, prop fee, anesthesia et cetera. As you know, the clinical quality scores in ASCs and obviously SP in particular are quite strong. And so we really have not had the similar impacts that maybe larger facilities have had in terms of readmissions or post-infection rates. That being said, I will say that the payers are encouraged by what what we're doing, we've had some approaches about where we'd be willing to take on, you know, a more extended bundle, maybe a 90-day bundle. At this point, we are entertaining those discussions. But as you know, we like being who we are, which is short-stay surgical facilities, that's what we do well. But we recognize that there's good partners out there for us. And so we're evaluating potential partners that we may consider a pilot program for an extended bundle going to something more like 90 days, and allowing us to participate in a number of avenues, including the fact that we like the clinical quality of our facilities, and we already know today, whether or not somebody has to come back to have a new joint replacement or a new hip, we already know that. So -- and we've very little readmittance to what we do today to begin with. So in some ways, if we do this program, we'll bet on ourselves for quality. But right now, we haven't picked the right partner or selected the partner that we think can help us manage this properly yet.

Ana A. Gupte -- Leerink Partners LLC, Research Division -- Analyst

Okay, helpful color. Thanks Wayne. Thanks Tom.

Wayne S. DeVeydt -- Chief Executive Officer

Thanks Ana.

Tom Cowhey -- Executive Vice President & Chief Financial Officer

Thanks Ana.

Operator

Our next question is from Frank Morgan with RBC Capital Markets. Please proceed.

Frank Morgan -- RBC Capital Markets, LLC, Research Division -- Analyst

Good morning. Wayne, a question for you. Now that you've -- you're in place, you've got your strategy implemented, your portfolio, you're starting to shape it the way you want to look. Just curious your thoughts about the long-term margin potential for your portfolio. We look at some of the other providers and obviously much, much higher margins, EBITDA margins. So I'm just curious, could you give us a little color around where you think the long-term potential is? What are you looking to see those margins get to over the next two or three years, given the strategy you put in place? And with regard to the portfolio today, when you look at margins, is it real chunky between -- is your waiting or distribution where you have a lot, there are low margins, already, you have some unusually high margin ones that influence the overall portfolio average for EBITDA. That's my question. Thanks.

Wayne S. DeVeydt -- Chief Executive Officer

Yes, Frank. Good morning. It's a -- lot of questions we've been there. But let me maybe just take a quick step back and start with the last part of your question, which is clearly our mix of business produces different margins depending on the type of procedures. As you know, certain businesses like GI are very high margin businesses, large volume, good cash flow businesses. But they don't necessarily move the needle meaningfully from a growth perspective, but we like them. As you know, one of the things that we did in '18 as we developed our strategy was to say, you know, margins absolutely matter, but we're an organization that actually wants to grow in absolute dollars and EBITDA. We're an organization that would like to have more free cash flow to deploy in a very fragmented market. And so markets are not the primary factor. That being said, I would expect continued margin expansion over where we finished '18, and I think we'll move in the points over time. We are going after Medicare, though, as you know, that does impact margins "negatively", but it contributes positive EBITDA. And we're very fixed cost leverage type organization relative to our facilities and their locations. So I would say that a lot of the margin expansion is going to start going to skyrocket, you know, in the next year or two necessarily, because it's a hybrid strategy of how do we grab more market share, both commercial and Medicare, while we shift over time into these MSK very high margin businesses that we really like and as well as very high dollar per minute contribution margin as well in terms of facilities. So probably a long way of saying your answer, yes, margins will be moving up. I wouldn't say that we've laid out specifically as much of a target margin as much as we've laid out target initiatives of what we want to capture in terms of market share and what we want to capture in terms of G&A leverage.

Tom Cowhey -- Executive Vice President & Chief Financial Officer

Frank, I mean, just mathematically, if you're only growing revenues off of your, you know, your current base by mid single digits and you're growing adjusted EBITDA by double digits, you're going to see margin expansion next year. You know, that's a down payment as we try to become more efficient over time. But, you know, there's essentially embedded margin expansion in the initial guide that we gave today.

Frank Morgan -- RBC Capital Markets, LLC, Research Division -- Analyst

Got you. One follow up and I'll hop. In terms of just the de novo developments, I'm just curious, one of those was a hospital, beyond that one, any other likely chances of future hospitals or is that sort of a one-off situation? Thanks.

Wayne S. DeVeydt -- Chief Executive Officer

Yes, at this moment in time, we are targeting more the ASCs. So it was very, very one-off, as you know, hospitals are very sizable investments. If you're familiar with the Idaho Falls Community and the surrounding territories, we have an exceptional product in the market. We know that demand chain is quite substantial there and for services and we know that we could offer much more. And in working in concert with payers, we know they're definitely looking for an improved quality at an improved cost. And so we have a surgical facility -- surgical hospital facility over there, but we think we can actually create an even bigger ecosystem with this. So I would say outside of Idaho Falls, no, we're not targeting, you know, de novo hospitals. We are targeting expansion in some of our surgical hospitals. We're adding ORs et cetera. But not what I would call full blown from scratch, you know, build out. We are doing a number of smaller de novo ASCs that we did not talk about. And again, generally focused around the procedures that we like and MSK being a priority.

Frank Morgan -- RBC Capital Markets, LLC, Research Division -- Analyst

Okay. Thank you very much.

Wayne S. DeVeydt -- Chief Executive Officer

Thanks, Frank.

Operator

Our next question is from Kevin Fischbeck with Bank of America Merrill Lynch. Please proceed.

Joanna Gajuk -- Bank of America Merrill Lynch -- Analyst

Good morning. This is Joanna Gajuk filling in for Kevin today. Thanks for taking the question. So just clarification question -- a follow-up question on the guidance just to make sure, because the comment was that you do not include the deals that you do not have visibility into. But are there deals included in the guidance because I guess you do talk about, you know, I mean that you're going to spend, $80 million to $100 million per year on acquisitions. So I just want to clarify how much of an M&A is included in the guidance for 2019?

Wayne S. DeVeydt -- Chief Executive Officer

I appreciate the question. But just to clarify again, where we finished 2018, as a starting point, we'll grow double-digit off that. When we say we do not include on identified M&A, it means any new M&A that we plan to basically close and consummate in '19. So for example, those transactions we got done in October of '18, clearly the run rate of those are included. But any new transactions we're doing from the $80 million to $100 million is what we see is more the substantive upside. In essence, we've signed on two agreements and deals in '18, that will run rate in '19, but this would be an incremental $80 million to $100 million that we would deploy that we have not contemplated in our guidance.

Joanna Gajuk -- Bank of America Merrill Lynch -- Analyst

Great, that's very helpful. And also, there were some comments made in terms of some of the new cost-cutting initiatives. Is there any additional color that you can provide for 2019 plan?

Wayne S. DeVeydt -- Chief Executive Officer

Well, some of the items that we undertook in '18 will support some of the '19 growth. There'll be a little bit more back-end weighted, and that's why we think Q4 will be strong year-over-year lift for us. But just to give you some examples of things we did in '18 that we plan to replicate in '19, one was we took our first round of procurement, as we mentioned, as we looked at sourcing and suppliers, we focused on the top 20 contracts out of the gate. We focused on the new GPO contract. But I would say that we essentially went after low hanging fruit. We really hadn't done strategic sourcing yet. This was just about obtaining the best pricing that was available on the market for a company of our size and scale. In '19, our goal is to start the much more in-depth strategic sourcing with that creating hopefully value in 2020 and beyond. The second example is that we rolled out a enterprise employee benefit plan, we were very fragmented organisation with many different health plans across our organization, and we went through a new open enrollment in the fourth quarter of 2018 for new benefits starting on 1/1/'19. And we expect to see the benefits of that to our associates because we've implemented a number of wellness programs for them. But ultimately, as you know, over time, these wellness programs end up (inaudible) when you're self-insured. And so we expect to see those benefits actually start to really ramp up at the end of '19, as people work through their health benefits and work through their deductibles. And then finally, I would just simply state that, you know, '18 was about, we spent so much energy -- in some ways, I would say we were so distracted by all the things we had to do to get this asset to where we wanted to be at, that really we haven't really got into what I would say, the efficiencies of leveraging our scale, as much as we could. Again, '18 was really about low hanging fruit, '19 is about strategic leverage, and where we can really take advantage of more fixed cost structure and bring more value creation, and so we'll be providing updates throughout the year similar to what we did in '18 around what are we doing, when do we think value creation will start and how does that translate to the future and we'll provide more in our -- probably by our second quarter we'll provide even more insights on that.

Joanna Gajuk -- Bank of America Merrill Lynch -- Analyst

So how much -- just to follow up on that. So how much would you say of the margin improvement came from the actions you took in 2018 on the cost cutting, because the margins did improve, right, especially Q4 nicely and even for the year, right? So, is there a way you think about how much of that improvement was due to these actions that you undertook?

Wayne S. DeVeydt -- Chief Executive Officer

I mean, in the most basic sense, I mean, if you think about it, since we exclude unidentified M&A, I mean, all the margin improvement is a combination of our G&A activities and our rates that we're getting on volume. It's all organic. And so, you know, it's somewhat fungible because as you know, the more volume I can draw on a fixed cost basis, did the revenue drive the margin improvement or did the reduction in cost drive the margin improvement? And because they're fungible, it's hard for me to parse those two out. But I do think it's, you know, it's fair to say that we were targeting for fit for growth going into this year, kind of a 3% to 5% improvement in G&A efficiency. And so if you think about that just from a lens, you know, you can kind of back into what that would have done for margins.

Joanna Gajuk -- Bank of America Merrill Lynch -- Analyst

Great, thank you so much.

Operator

Our next question is from Whit Mayo with UBS. Please proceed with your question.

Whit Mayo -- UBS -- Analyst

Hey, thanks. I might just ask that last question a different way. Is there any way to put just dollar numbers around the strategic initiatives from procurement GPO just as we think about 2019, I get the fungible comment on margins, but just in terms of dollars, that would be -- maybe helpful.

Wayne S. DeVeydt -- Chief Executive Officer

Well, if you go back to our quarterly calls in '18, I'm trying to do this from memory, but I think if you go early in the year, we thought we would be able to target run rate of around $15 million from procurement savings. Now, remember, those did not all and are to us. Many of those are shared with our physician partners. On average, we generally own around 55%, 60% of our facilities. So if you wanted to back into a number, you can get a feel for about how much of that is ours. And as you know, the GPO contract, for example, on some of the procurement items really didn't start with new contract until third quarter and many of those contract efforts didn't happen. And so you're really getting some of that ramp up. You're not getting the full lift in 2020 because you've got a little bit in '19, but you can see kind of the ramp up if you wanted to back into those numbers just using kind of that math, I'm giving you kind of a gauge of how much of that just happened from GPO and procurement.

Whit Mayo -- UBS -- Analyst

Okay. That's helpful. And Tom, if my math is accurate, I think you're getting maybe $55 million dollars of add backs to the bank agreement for EBITDA to get to 7 -- I'm just trying to maybe reconcile what that number means for growth expectations in 2019 and then may be, is there any way that we can forecast what the add backs could be? I know that that's really a moving target based on a lot of these initiatives and acquisitions when they kind of crystallize in your mind.

Tom Cowhey -- Executive Vice President & Chief Financial Officer

Yes, well, I think that's a fair question. So as you look at our credit agreement for certain types of initiatives, we actually get to incorporate 24 months' worth of value associated with those. And so as we think about our procurement initiatives, and we think about our revenue cycle initiatives, those are the places where we have gone out 24 months. And so you're looking at 2 years' worth of potential upside associated with the dollars that we have invested today in the initiatives that we have in place. You have acquisitions in that number, and so on the day that we do those acquisitions, we put the full next 12 months into our roll-forward less, for the October acquisition, for example, you would see a 10-month impact in the pro forma number at the end of the year. We would also subtract out of that, the value of the divestitures that we have executed. But you would also see inside those numbers, some of the efficiencies that we are expecting for over the course of the next 12 months, particularly from some of our headcount and other consolidation actions, some of the corporate synergies that we've talked about would accrue in 2019. Those are probably the majority of the adjustments that you would see inside that credit agreement EBITDA.

Whit Mayo -- UBS -- Analyst

Maybe the most simplistic way to look at it, if that $55 million, if that's the right number, if that captures future growth that you expect to obtain in the next 24 months, that should be at least an expectation for what we could see in 2 years, at least based on what you've identified today, is that the best way to look at the $55 million?

Tom Cowhey -- Executive Vice President & Chief Financial Officer

Yes, it's less about growth. So it starts with the LTM calc for the EBITDA, and then it adds essentially the value of initiatives. So where, you can think of it is, I've made the investment, but the investment hasn't borne fruit. What's the value of the investment over the course of the next 12 months or 24 months? It isn't really, hey, I think I can grow my organic, although there is a very small item in there associated with some of the run rate of our physician investments, because -- our physician recruiting investment -- again, we're bearing that G&A , but we haven't seen the full run rate of that.

Whit Mayo -- UBS -- Analyst

Got it.

Tom Cowhey -- Executive Vice President & Chief Financial Officer

But otherwise, we're not contemplating organic growth in there, it's contemplating specific items that we've invested in and the benefits that we expect to receive.

Whit Mayo -- UBS -- Analyst

And maybe two quick ones if I can. I was just wondering if you guys looking across the enterprise are doing anything differently with your anesthesia strategy. Just wondering if there's anything new, how you're using CRNAs or groups, anything that's different in GI or other specialties at this point?

Wayne S. DeVeydt -- Chief Executive Officer

Appreciate the question. The short answer is not yet. And the primary reason has been that our focus has been so much on pruning our assets this year and getting to the core ecosystem that our anesthesia assets were performing well and have continued to perform well. And so they've been a lower priority. That being said, I will tell you, it's a focus of ours in 2019 and it's one of the areas that we actually recently met with as a team with our Board about some of the opportunities we want to evaluate deeper within our anesthesia business. But at this point, we've not gone deep yet and that's part of our focus for the upcoming year.

Whit Mayo -- UBS -- Analyst

Mainly way to maybe to elaborate more on what those initiatives would be and I think some other ASC groups have insourced a lot of the anesthesia. So I'm just kind of wondering what you're you're thinking about.

Wayne S. DeVeydt -- Chief Executive Officer

Well, as you know, for those assets that we own, we actually currently insource and in one case we actually do outside business as well. What we like about the anesthesia business is not only ability to control the schedules and work with our doctors and our patients love it. But, you know, we also like the idea of the flexibility it gives us when we receive bundled payments, for example, on total joints. And so what we're trying to evaluate strategically is, are there ways to leverage this even further and grow there? As you know, there are organizations that do nothing but consolidate this space and specialize in this space. But it's an integral part of what we do. And so we're trying to evaluate are there ways for us to actually have a similar growth strategy that could be developed within it while not losing focus on our core, which is short-stay surgical facilities.

Whit Mayo -- UBS -- Analyst

I'm good. Thanks, guys.

Wayne S. DeVeydt -- Chief Executive Officer

Thanks Whit.

Operator

Our next question is from Bill Sutherland with the Benchmark Company. Please go ahead.

Bill Sutherland -- The Benchmark Company -- Analyst

Thanks, and good morning. Real quick back to Whit's question about leverage. And since we can't really calc it very, very effectively ourselves. Where should we think about 7.7 times directionally going forward?

Tom Cowhey -- Executive Vice President & Chief Financial Officer

You know, Bill, we actually talked specifically about this in the prepared remarks. You know, the plan that we have and I don't think that this is, you know, this is new or something that we haven't talked about, is really to grow into the leverage. You know, it's part of the reason, as you think about some of the M&A commentary that we made earlier, we're focusing on or our preference would be to have an average multiple of execution that's below our leverage ratio because it helps -- we look at those transactions as both an opportunity to grow, but also an opportunity to delever. You know, the timing between quarters that -- that number on leverage may fluctuate. But our goal is to drive it down over time as we grow the EBITDA of the business.

Bill Sutherland -- The Benchmark Company -- Analyst

Okay, and then so there's no plans on the debt structure this year. I know you did some rate swaps and so forth to fix more of it last year.

Tom Cowhey -- Executive Vice President & Chief Financial Officer

We're always -- we're always evaluating the debt structure. You know, we have some near-term maturities. We're looking at those. You know, we're as we think about the value creation from the deployment of capital, it's something that we constantly consider. But, you know, we look -- we're looking to deploy that capital in ways that would be accretive to the leverage ratio overall.

Bill Sutherland -- The Benchmark Company -- Analyst

Understood. Last one. Wayne, you've talked in the past about going a step further with the payers than just, you know, risk sharing, bundling and actually some strategic co-investment discussions. And I wonder if there's any update on that direction? Thanks.

Wayne S. DeVeydt -- Chief Executive Officer

Bill. Thanks for the question. So the short answer is we have a couple of lines in the water right now that have got good momentum. We've got NDAs signed. We are looking at actually doing co-ownership with -- with a named pair that people would recognize. And the concept being that we're looking at both de novos within, in fact, we're recruiting physicians right now regarding the de novo and we are looking at potentially even jointly acquiring a facility together at this point. So I would say it's no longer early stages, but these again have long digestive periods. But, yes, we've got a couple of lines in that we're feeling encouraged about at this point and we're hopefully gonna be able to show the payer community the value we can continue to bring. We're excited about what we did on the bundle front and we see that getting momentum. I think we're trying to show them the opportunities of having even more influence if they partner with us. So more to come. Hopefully throughout '19, we'll be able to announce a couple.

Bill Sutherland -- The Benchmark Company -- Analyst

Great, thanks again.

Wayne S. DeVeydt -- Chief Executive Officer

Thank you

Operator

I'd like to turn the (multiple speakers) go ahead -- closing comments from Wayne.

Wayne S. DeVeydt -- Chief Executive Officer

Before we conclude our call, I want to take a moment to say thank you to our 10,000 plus associates for their contributions. This has been a heavy lift year for the team and I know I feel privileged to be able to participate in this journey of improving healthcare, making it more affordable for Americans, as we execute against our goal to become the preferred partner for operating short stay surgical facilities across the US, it is a daily efforts of each and every one of our employees that will get us there. Thank you for joining our call this morning and have a great day.

Operator

Thank you for your participation. This does conclude today's teleconference, you may disconnect your lines at this time and have a wonderful day.

Duration: 61 minutes

Call participants:

Tom Cowhey -- Executive Vice President & Chief Financial Officer

Wayne S. DeVeydt -- Chief Executive Officer

Jason Plagman -- Jefferies -- Analyst

Chad Christopher Vanacore -- Stifel, Nicolaus & Company, Incorporated, Research Division -- Analyst

Ralph Giacobbe -- Citigroup Inc, Research Division -- Analyst

Ana A. Gupte -- Leerink Partners LLC, Research Division -- Analyst

Frank Morgan -- RBC Capital Markets, LLC, Research Division -- Analyst

Joanna Gajuk -- Bank of America Merrill Lynch -- Analyst

Whit Mayo -- UBS -- Analyst

Bill Sutherland -- The Benchmark Company -- Analyst

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