Surgery Partners (NASDAQ:SGRY), Inc., a leading healthcare services provider, has successfully entered into a significant refinancing agreement, according to a recent 8-K filing with the Securities and Exchange Commission. On Thursday, the company, through its subsidiaries, finalized a first amendment to its existing credit agreement, securing a new $1.4 billion tranche of term loans.
The Brentwood, Tennessee-based company, which operates under the industrial classification of general medical and surgical hospitals, has replaced its previous term loans with the newly acquired 2024 Refinancing Term Loans. These loans are set to mature on December 19, 2030, offering a more extended repayment period for the company.
The interest rates for the new term loans are competitive, featuring a rate based on the Secured Overnight Financing Rate (SOFR) plus an additional 2.75% per annum, or an alternate base rate that comprises various financial benchmarks plus 1.75% per annum. The amendment stipulates that the loans will start amortizing in quarterly installments of 0.25% of the principal amount, beginning around the end of the fiscal quarter on September 30, 2024.
Voluntary prepayments on the 2024 Refinancing Term Loans are permitted without any premium or penalty, except for a 1.00% call premium if certain repricing events occur within six months of the amendment's effective date.
The transaction was facilitated by Jefferies Finance LLC, which acted as the fronting bank, administrative agent, and collateral agent, along with other financial institutions. This strategic financial move is expected to provide Surgery Partners with a robust financial structure to support its ongoing operations and future growth initiatives.
The 8-K filing also includes the full text of the Amendment, providing transparency and detailed information regarding the terms and conditions of the agreement. This refinancing effort underscores Surgery Partners' proactive approach to managing its financial obligations and strengthening its balance sheet for long-term success.
The information presented in this article is based solely on the facts from the press release statement and the SEC filing by Surgery Partners, Inc.
In other recent news, Surgery Partners has reported robust growth in its Q1 of 2024, with net revenues reaching approximately $717 million, a 7.7% increase year-over-year, and adjusted EBITDA of $97.5 million, marking an 8.2% increase from the prior year.
This growth was attributed to a focus on higher acuity procedures and successful physician recruitment, notably in orthopedics, where total joint replacements surged by 54%. In light of these developments, Surgery Partners has raised its full-year net revenue and adjusted EBITDA forecasts to at least $3.05 billion and $505 million, respectively.
In other recent developments, shareholders of Surgery Partners approved key proposals at the 2024 Annual Meeting. They elected all Class III director nominees, approved the compensation of the company's named executive officers, and ratified the appointment of Deloitte & Touche LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2024. Moreover, the shareholders approved the employee stock purchase plan, allowing eligible employees to buy company stock at a discounted price.
Despite a revenue decrease of $36 million from divested facilities and uncertainty in Medicaid reimbursement and state tax policy, Surgery Partners expects to exceed the 2% to 3% volume growth target for the year.
The company also anticipates closing on $200 million to $250 million in acquisitions in the second quarter. These are recent developments that highlight the company's robust Q1 growth and positive outlook for the year.
InvestingPro Insights
In light of Surgery Partners, Inc.'s recent refinancing initiative, a closer look at the company's financial metrics and market performance offers additional context to investors. With a market capitalization of approximately $2.99 billion and a high P/E ratio, reflecting a value of 4740, Surgery Partners trades at a significant earnings multiple. The adjusted P/E ratio for the last twelve months as of Q1 2024 stands at 3364.03, indicating high investor expectations for future earnings growth.
Revenue growth remains steady with a 7.1% increase over the last twelve months as of Q1 2024, and a quarterly revenue growth of 7.69% in Q1 2024. These figures suggest a consistent upward trajectory in Surgery Partners' financial performance. Moreover, the company's gross profit margin is healthy at 23.93%, demonstrating its ability to maintain profitability amidst its expansion efforts.
InvestingPro Tips highlight that Surgery Partners is expected to continue its growth, with analysts predicting the company will be profitable this year. Moreover, the stock's current trading level is near its 52-week low, presenting a potential opportunity for investors.
For those considering a deeper analysis, InvestingPro offers additional tips on Surgery Partners, and interested readers can take advantage of a special offer using the coupon code PRONEWS24 to get an extra 10% off a yearly or biyearly Pro and Pro+ subscription. With 7 more InvestingPro Tips available, investors can gain a comprehensive understanding of the company's prospects.
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