Surgery Partners, Inc. (SGRY) Earnings Call Transcript

Good afternoon and thank you for joining us. My name is Lisa Gill, and I am head of health care services here at JPMorgan. It's with great pleasure this afternoon that we have with us Surgery Partners. Presenting for Surgery Partners are Eric Evans, CEO. And then after Eric does the presentation, he's going to join myself and Dave Doherty for just some Q&A. So with that, let me turn it over to Eric.

All right. Good afternoon and Happy New Year, everyone. My name is Eric Evans. I'm privileged to serve as the CEO of Surgery Partners. Delighted to always talk about the company. It's always a nice opportunity. I would just, before I get started, mention that we did prerelease this morning reiterating our 2023 guidance and providing an earnings at least of or better than $495 million adjusted EBITDA next year. So in case you missed that, just wanted to make sure I said that. Also, I'm going to do my best to say relatively short on the -- on my presentation so we can have at least half the time for questions. For those online, I'll do my best also to reference slides as we go forward. So really 3 topics that I'm going to cover today. First of all, introduction to Surgery Partners, who we are, what makes us unique, what's our history and story. Number two, some investment highlights for our company that I think makes us one of the best investment opportunities within health care services. And finally, a little bit of a track record for us on what we've done from a financial metric standpoint, consistently over the past 5 years, where we see those metrics going in the future. So with that, I'll dive in. This is who we are today. You can see a portfolio of our map. We've built our company over 20 years, approaching 160 surgical facilities across the country. And I would highlight a couple of things on this slide. First of all, we use this as leverage to make us a better company. So if we find something in Providence, Rhode Island, where we have an opportunity, whether it be in supply chain, clinical quality, we -- our goal is to make sure that the next day, we're doing that same thing in L.A. So we use this -- these 160 facilities as a way to quickly provide better service for our nearly 5,000 surgeons that are on our staff as well as the 650,000 patients we treat annually. You can see we're now across 32 states and the numbers at the top are trailing 12. I'd also mention here, we're a pure-play surgery operator. So we kind of say that term just to make sure what I mean. We are independent. So we're not owned by a big health system. We're not owned by a health plan. We are primarily partnered with physicians. And that is something we're proud of that independence, we think it differentiates us in the marketplace. That portfolio has really been anchored by really consistent strong performance and from a financial standpoint. So you can see our CAGR over the past 6 years has been about 18% for adjusted earnings, very proud of that. Importantly, the majority of that has been organic, same-store growth through physician recruitment, service line development. And at the bottom, you can see 350 basis points of margin improvement over the past several years. The good news is that trend isn't changing. We feel that's the trend for us for the foreseeable future. We'll talk more about that in just a second. Our growth algorithm is very simple. For those of you who followed our story, it hasn't changed. It's consistent, it's easily understandable, and therefore, executable by our team. I'll start on the left-hand side. We expect to get 4% to 6% growth a year from top line growth. That's consistent of 2% to 3% case growth and 2% to 3% volume growth. And for those online, I'm on Slide 7. And recruiting and service line expansion are part of that 2% to 3% case growth. We've outran the 4% to 6%, I'll be honest, over the last several years because we've been continuing to grow acuity. But in a normal year, we think 4% to 6% should be your expectation on top line growth. If you go to the right side of this slide, capital investment, that should be another 4% to 6%. When you think about the highly fragmented nature of our marketplace, we have lots of great M&A opportunities. I'll go into more detail in the future -- or in a future slide on. Health systems, health plan partnerships, we announced 3 of those this year. I'll talk more about that in a second. In the final -- newer to our playbook is de novos. We have 17 of those in flight. We expect to do double-digit de novos for the foreseeable future per year. And so at the bottom, that averages out to 11% to 17% growth. We expect to be in that range, hopefully in the mid-teens on average for the next few years. The upside of that, of course, is over time, as we continue to increase our free cash flow, capital investment opportunities certainly could be more. Our company, fortunately, is also built on a foundation of a very, very strong product. So at the top of this slide, you can see we are a preferred provider for patients. We have high -- very high patient satisfaction scores, well above the national averages. We have very happy physicians, high retention rates, really strong same-store growth, both of our new recruits and our existing partners. And at the bottom, because of our value proposition, we are well positioned for continued growth. So 40% to 60% savings when you compare procedures done in our short-stay surgical facilities versus traditional acute care. And because of that, CMS continues to lean in, right? During COVID, they added total joints, they added cardiology. Really pleased to see this year, they've added total shoulders and total ankles. So we see tremendous opportunity, obviously, there for continued growth. All of that couldn't be possible without our culture. So our company is a very mission-driven company with core values we talk about a lot. These aren't things we just put on the website or print out a piece of paper. We use this to operate the company. Our mission statement is to enhance patient quality of life through partnership. So 2 things I'll point out. One is we understand our mandate to growth is by having a superior clinical product that has great patient satisfaction. We also understand everything we do is in partnership. So everything we own is with physicians. It's what allows us to have great clinical outcomes. It's what allows us to have great alignment. I could spend the rest of the presentation on this slide going through our core values. I won't. But I will point out the last item on here, which is setting and exceeding expectations. You saw our financial slide just before. Our goal is to always be a meet-and-beat company, and we have proven that consistently over the past several years. With that, let me jump into investment highlights. Six things I want to cover today. One is we have an amazing addressable market. Our TAM is $150 billion. It's got a lot of macro growth drivers in it, including the aging population and the movement to high-value, higher-quality or higher-value settings for patient care. So you think about cardiology, orthopedics, we can save $10,000-plus per procedure. It makes a big difference, obviously, for the health care system. Number two, we're an industry leader in those specialties where that movement is happening. The third thing we'll talk about is our product. We are very, very proud every day of the 13,000 employees who are dedicated to providing outstanding patient quality, and we'll talk about that. Fourth, we have an amazing M&A pipeline. So if you think about our business, not only do we have the great organic growth, but we're in a very fragmented industry. We've proven record of finding accretive opportunities year after year. We have a great management team. Dave Doherty is here with me; our Chief Development Officer, Jennifer Baldock, is in the back. Very, very proud of our team. We put them up against anybody in the industry. And lastly, we have consistently delivered on what we said we're going to do. So those are the 6 things we're going to run through. I'm going to start with our markets. And we are in a -- I think, a sweet spot of health care services. If you look on the left-hand part of Slide 12, you'll see kind of what's happening in health care. All of you are aware of this trend. Everything is pushing to put patients in the lowest acute -- the lowest-cost setting you can. So ideally, everyone gets treated at home. I don't think that's going to happen anytime soon. But you can see the movement that's consistently been happening across the industry. It's happening to us on some of the lower-acuity stuff, but we're sitting in the sweet spot, and I'll tell you why. So you think about the ASC industry today, it's about a $40 billion industry growing at 6%. If I stop there, that's a great marketplace. Really, really excited to be part of that. What makes this industry -- what makes our opportunity so different, though, is how much still sits out there to grow the market. So there's another $55 billion to $60 billion that today sits in the HOPD world that could be better served and better done at a higher value in our settings. And on top of that, there's another $60 billion that currently sits in the inpatient surgery world that will be moving into the outpatient space in the coming years. So you think about that, great market today, growing at 6% but another basically $100 billion, $110 billion moving into our space in the coming years. We are well positioned to capture that. 60% of that movement is in specialties where we -- that are core to who we are. So super excited about the opportunity in that $150 billion TAM. Within that world, we believe we have the right specialties. So I'll highlight that our CAGR growth on total joints has been 95% for the last 5 years in our ASCs. So rapid growth in those specialties. In ophthalmology and GI also, very strong growth that is aligned with the aging demographics. We're in the right markets. So 40% of our facilities are in the top 5 MA states in the country. It's a very similar percentage when you look at our commercial -- top 5 commercial markets. We have the right partnerships. Because it's such a fragmented industry, we have a lot of choice. We have partnered with many of the top groups in the country. We look for high-quality partners that are like-minded that see the world the way we do. And we feel -- we know we have fantastic independent physician groups and health system partners that are helping us drive our growth. And finally, we have the right facilities. So the vast majority of our facilities are multispecialty, meaning we have all the levers of growth. We also have renovated these facilities dramatically. So we have 24 -- 26 facilities since 2018 that we've expanded or completely renovated. I mentioned earlier, we have the 17 de novos. We've also added 37 robots to those facilities to position ourselves to capture those higher-acuity cases moving forward. We are well positioned in this world. We have a very diversified case mix, but it's in the focused specialties where we see the highest profitability. You'll see our largest service line is musculoskeletal, MSK. It represents more than 50% of our revenues followed closely by ophthalmology and GI. On the right-hand side, I would highlight, since 2019, our lowest of our core growth specialties is ophthalmology at 3.7% case growth per year, right? So really strong kind of across all specialties case growth since 2019. I'll also highlight cardiology at the top. That's a small n. Cardiology today is about 1.5% of our cases, a little less than 3% of our revenue. We do expect that to grow rapidly. I'll spend a second on that in a moment. We didn't just choose those 3 specialties by accident. We spend a lot of time. We're a data-driven company. And our biggest bottleneck, our most expensive asset, is our OR time, right? So we spend a lot of time thinking about what are the highest contribution margin procedures we can do permit in our ORs. You'll notice it's no accident, ophthalmology, GI, orthopedics, cardiology. So we look at this constantly. We try to find ways to maximize how we use that valuable time, and it continues to play into our growth. When I think about cardiology and MSK in particular, the reason we highlight those so much is they're really, really important on the payer side of the community, right? These are procedures where patients can save, the health system can save 5 figures-plus, $10,000-plus per procedure when you think about PCIs on the cardiology side, you think about spine surgery and joints. On the orthopedic side, we have invested a lot of money to be ahead of that, starting in 2017, and really positioning ourselves to have the [catchment] to drive that growth. 80% of our facilities today perform MSK procedures. And you can see some of the strong brands we built off to the right. On the cardiac side, we're in the early innings. We're adding about 5 procedure -- about 5 new programs a year in our ASCs. I will highlight those today are primarily cardiac rhythm management, right? These are not full-blown cath labs yet. So we're starting with things like AICDs, lead extractions, EP procedures. But we do, in our de novo pipeline, have cath lab-based ASCs being built. And we are every time we look at expanding in ASC, we're having that conversation, is now the right time to add a cath lab? So we see that as a big future growth play for us. Everything we do is built around utilizing a very capital-efficient flywheel. So when you think about our growth, we start with, do we have a facility that's in the right sweet spot of our demographic growth and kind of trending for growth based on the community stats? Then we add our physician recruitment engine to that. So many of you following us will know we recruit about 600 new physicians a year to our facilities. That's obviously a big part of our same-store growth. We focus a lot on adding orthopedics and cardiology because those matter, a, most to the payers. They also provide a very high contribution margin per minute. Once we add those surgeons, we slowly start increasing acuity, right? So we might start with a CRM program and then go to a cath lab. We might start with sports medicine and then go to total joints. We then look for end-market opportunities to grow. And finally, we use our scale to drive payer strategies and reduce our supply chain cost. So this is what we apply kind of every single facility, every single service line. And to see that in action. So we've applied that in Orthopedics for the last 6, 7 years. You can see that has been a 10% CAGR on orthopedic procedure since 2017. We do over 100,000 MSK procedures per year. And just this year, we have added 100 new orthopedic surgeons through September. So big focus. It allows the team to execute in a very clear way using that flywheel and is paying off in our results. I mentioned earlier cardiology. We are very, very excited about the cardiology opportunity. It is not going to be overnight, though. So just like orthopedics was not, there's a couple of barriers to cardiology, moving quicker. One is it's a highly employed specialty. So physicians, even if they want to be independent, they often have a 3-year employment agreement. So there's some delay there. There are about 20 states that still have not followed CMS in making PCIs and higher-acuity ASC procedures available based on CON laws in the state. But all of that stuff will go away over time with the numbers. It's been proven to be safe and efficacious. Cardiologists are reaching out to us on a regular basis saying, hey, we want to do this. We're not happy employed. We want to have a seat at the table. This is one that over the next several years, we expect to be one of our leading growth engines and over time will be just as big, if not bigger, than the orthopedic opportunity we're in the middle of today. This is a big one for me. I don't think we have the mandate for the kind of growth we are experiencing without having a great product. So really proud to say that all 10 clinical metrics that are part of the ASC quality collaborative, we are above benchmark. All 10 -- all of our surgical hospitals are either 4 or 5 star from CMS. And you can see at the bottom, the numerous other awards we win. We have to maintain and continue to drive a differentiated product, and we've done that consistently over the past many years. All that results in an NPS score that, I think, anybody would be proud of. Our Net Promoter Score is comparable to really well-known names across different industries. Patients don't have that experience in the traditional health care system. If you think about traditional acute care, the scores are probably 20 points lower. So it's a big differentiation point for us to have patients not only save money but leave with a much better experience. Part of how that works is the way we partner with physicians. So physicians often, and I used to be in big hospitals, you do feel like a cog in a wheel. In our facilities that are focused factories, they sit at a table with us. They help drive clinical protocols. They have ownership in how that patient experiences the facilities. And that really allows and enables everything that I'm talking about today. This is not something that happens just by accident, right? These physicians put a lot of blood, sweat and tears in their facilities. And you can see at the bottom, we have a very, very high retention rate because of that. We also have other partnerships, the 3-way JVs I'll talk more about in a second. We're doing more health system partnerships recently. And then we also have multi-facility management agreements that are a small part of our business. Part of what allows our portfolio to work so well is we've spent the last 5 or 6 years moving to in-state systems. So that's everything from revenue cycle to HRIS. This company historically was a roll-up of roll-ups in some ways. We spent 5 years kind of creating that system is. That is proving to be very valuable. It allows us to have data to move faster. It allows us to use things like robotic process automation, you'll notice at the bottom, to drive value to these centers in ways they can't possibly do on their own. And lastly, that also enables all of those functional areas that are part of, if you go back to my growth algorithm, that middle core operating system, that 3% to 5% earnings growth, that's what this slide's about. It's managed care supply chain revenue cycle, the things that we bring in that instantly reduce the cost of the facilities we buy and that every year get better for our physician partners. I mentioned earlier that a big part of our growth algorithm is M&A. And this segment continues to be extremely fragmented. So if you look on the left-hand side, there's over 6,200 Medicare-certified ASCs in the country. Over half of those are still independent. So over half of those are still in play for us to be able to help consolidate, help drive better results for. In addition to that, there's another 6,000 ASCs that are non-Medicare-approved, right? So there's 12,000 ASCs out there. The vast majority of them are independent. We talk about having a target of at least $200 million of M&A every year. That is going to be available for the foreseeable future. There is tremendous amounts of consolidation still happening. On the right-hand side, the physician-owned hospitals are short-stay surgical hospitals, which we also love. There's a set amount of those. There'll never be more unless the Affordable Care Act gets changed. But when they come up, we certainly like to add them to our portfolio because what it allows us to do is then have a physician JV model across the care continuum. We put them with ASCs, and we're then able to take higher- and lower-acuity surgical patients. So I mentioned my colleague, Jennifer in the back of the room. On Page 26, we kind of give you a feel for what we've been doing in M&A. On the left-hand side, one thing we are committed to is always looking at our portfolio and doing proactive portfolio management. So we have 160 centers. In any given year, there's always going to be a handful that maybe aren't -- we're not the best natural owner of. And so we spend time diligently looking for opportunities where we can sell something from -- for a higher multiple, redeploy those funds in a faster-growth market or center. The acquisitions in orange you can see over the past several years, including this year, where we've closed $225 million through today. We did have some deals slip into January, but you can see a consistent track record of exceeding that $200 million acquisition number. All of those, that sub-8 multiple is what we shoot for. And then our goal is to take a turn to 1.5 turn off in the first 18 to 24 months. So we spend a lot of time doing that. Obviously, that translates pretty well when you look at our stock multiple as far as accretion. On the partnership side, I mentioned earlier, this is something we have picked -- really ramped up as far as part of our growth strategy. So this year, we announced our partnership with Intermountain Health. We'll be transitioning and managing all their facilities in Utah. And we are also growing JV -- equity JVs, ASCs across the Mountain West with them. Methodist Cell System in Dallas, we bought into their existing facilities, 4 in Dallas. And we have a bunch of interesting projects underway in Dallas. And then Ohio Health, same thing, statewide ASC partnership to go and move transition patients -- higher-acuity patients into the ASC setting. Finally, on the pipeline, 17 de novos, I mentioned this earlier. That's going to be a great growth opportunity for us going forward that we see 10-plus a year. And our pipeline remains really, really strong. So Jennifer has already got $200 million under LOI heading into the year, another $100 million where we have submitted offers. We have a great team. I will, for the sake of time, not go through the team in great detail. But we have a team that's very experienced. They've been through lots of different health cycles. We have deep experience in managed care world. We have deep experience in the value-based care world, and we have deep experience in health care service operations. And this team has been the ones that have allowed us to drive such consistent performance. Lastly, our track record. So our last 16 -- 15 consecutive quarters, we've met or beat our guidance, and we want to be a beat -- a meet-and-beat company. And I mentioned earlier, if there was one core value I wanted you to focus on because it matters to this room is that our goal is to always set and exceed expectations. We built that into our culture. We just set more expectations this morning that our job is to meet and beat. Quickly, because I want to make sure we have lots of time for questions, here's a little bit of a track record. Covered some of this. You can see on the right-hand side, I already covered our growth history on adjusted EBITDA. But same story on net revenue. You can see the CAGR over the past 7 years has been nearly 13%. It's been strong, it's been consistent. And quite honestly, this page is what I want to spend a moment on, which is we don't expect that to change. So we have high visibility into our mid-teens growth. We have every expectation that by the end of 2027, we will have bottom line earnings of $750 million or more. And we're excited to continue to grow the company at a mid-teens pace. I do want to spend a second because this is a frequent topic of discussion right now in health care, which is the leverage of health care service companies. You can see we've cut our leverage in half over the past several years. Proud of that. We also -- for those of you who saw late last year, we closed a very successful refinancing of our term loan. We actually got 2 upgrades before we went out with that term loan. We were managed to -- because we were so strongly oversubscribed. We managed to actually cut our pricing versus our prior pricing. So we have real interest savings on our refi term loan that was pushed out to 2030, much better terms. We also have a higher revolver going forward of over $700 million. And we continue our deliberate multiyear hedging strategy. So for those of you who know our effective interest rate, we've been entirely hedged, we are through early '25, is less than 6%. And we have adequate liquidity to do everything I talked about in our growth algorithm. So we are continuing to execute on that. I'd point out 2 things at the bottom. Number one, we have a track record of really reducing that leverage. We expect to be in the mid-3s by the end of 2025. And in 2025, we will be notably at $200 million free cash flow, which can fully fund our planned M&A. So with that, a recap, fast and growing TAM, super excited about the opportunity for us to take advantage of that. We are well positioned within that TAM. You can see year-to-date 10.6% same-store growth. We have a superior product. We've got a great team delivering excellent care every day that differentiated. Number four, with Jennifer's help, we have a consistent track record on M&A with an unbelievably fragmented market and opportunities in front of us. We've got a great team. And lastly, we've got a track record of doing what we say we're going to do. So with that, I will end, and you can ask questions.

Let me start first with utilization in the fourth quarter. Can you talk about any notable shifts in utilization cancellation rates? And I think also just kind of piggybacking off of that, I think there's still this debate of is there pent-up demand in the marketplace?

I'm going to let Dave start off this question. I might add a little bit.

Yes. Thanks. He does that because we haven't closed the books fully yet. So what we have, obviously, this morning, we felt confident enough in what we saw inside the fourth quarter to be able to reaffirm our guidance going through results through November. But obviously, we have good visibility into the cases that come through our business. I could say we had no unusual events that occurred to us inside the fourth quarter. In fact, we've seen that for most of the year this past year. So no ice storms or anything kind of crazy that otherwise might happen inside the fourth quarter sometimes. And the trajectory that we have been seeing all year in terms of case growth across all of our core specialties, continuing that strong momentum that Eric was presenting earlier on that long term -- that 4-year CAGR that we've seen, each one of those teams continuing to produce where we want them to produce. So utilization remains consistent. Nothing unusual on the upside or on the downside, but good strong continued momentum.

Yes. And on the second part of your question, kind of all year long, we've been dealing with every quarter, it feels like somebody is stepping out and saying, oh, my gosh, there's this huge push into outpatient. And I guess what I would say is this, we have seen strong growth. I mentioned earlier, we have a 95% CAGR on total joints. So yes, it's dramatic, but it's the same. So we've struggled with this a bit because from quarter-to-quarter, from various different angles, we hear this, hey, pent-up demand. What's great about our business is we do have these deep relationships with our partners and our surgeons in our markets. They have deep community relationships. They know if there's pent-up demand. They are seeing nice growth, but there is nothing out there that's different than it has been historically. Strong growth, consistent growth. We're -- we absolutely agree there's a big transition happening. It's just, at least in our portfolio, it's been consistent. And we don't see the ups and downs that seem to kind of gyrate through quarter-by-quarter. And in general, in health care services, I think you know this, like we need data point moves too big, I always say there's -- first thing I check is, is there something off the data because things just don't move that quickly in our business.

Then as we think about 2024, right, and we think about utilization in '24, you talked about the different service lines as we go into 2024. Just given the acquisitions that you've made, should we see anything different in utilization of those service lines in '24 versus what we've seen, say, in '23?

Yes. No, I think what's great about our business is it is very, very consistent, right? So I'm going to go back to that slide that showed our CAGR in our core service lines. The lowest CAGR we had was 3.7% case growth since 2019 with orthopedics being more like 7%. I think you'll see more of the same. We've got very clear visibility into the type of recruiting we're doing. We know what specialties we're adding. That transition is still happening from HOPD and from acute. So more of the same. Now I will say we're going to continue to focus on cardiology being an opportunity, clearly spine and total joints. But the good news about our story is it's relatively simple to explain and it's very, very consistent.

I appreciate that. And I appreciated the pre-announcement this morning even though it was very early for me. And at least $495 million of adjusted EBITDA growth in 2024. What are the key items that are going to drive that growth next year when we think about that? It's roughly 13% off of what consensus numbers are today.

It is yes. And it is -- we'll give a lot more detail when we get to our fourth quarter earnings call. Since you invited us this morning, we decided to give at least this much [indiscernible]. But getting there is really that simple growth algorithm that Eric was talking about earlier. As we've seen throughout all of this year, all of those growth levers have been contributing to us in a meaningful way. So we've seen top line growth coming to us from both case and from rate. And on the rate side, it's been a little bit heavier as the acuity has shifted for us as we've seen. That -- nothing, again -- as Eric just said, nothing is going to change that quickly. So you're going to see that trend continue. So we're probably going to be feeling pretty good on the top line growth story. Our M&A of 4% to 6% is on our commitment to spend $200 million. And as you just saw, we completed $225 million through today and another $200 million in the pipeline. So that feels pretty good with one exception: timing. The timing on M&A is fickle. And we are not a company that is going to execute M&A just to simply meet a number. So we're going to do it when the time is right. We keep referencing Jennifer. She holds us to a very deliberate approach and discipline before we execute on a deal, and we'll let that process kind of go through. As a result, that will affect your timing, right? It is why we start off with the guidance range that we have. And the margin expansion that comes from both last year's acquisitions rolling into our flywheel will start to spin up some margin for us. And there's still plenty of room for us to grow on the procurement, on the rev cycle side, on the managed care team side. So all of those growth algorithms for which we have teams that are hold accountable, both at the corporate level all the way down to our facility levels, should all be providing meaningful contributions as we get into this year.

And as we think about contributions from things like de novo facilities, right, you talked about 17 de novo facilities. How do we think about the margin on de novo facilities and the impact that, that will have? Because I would think that those margins are going to be lower, right, than your core book of business, and then it will improve over time?

Yes. So great question. So we're -- first of all, say we're super excited about our de novo opportunities. It's really picked up in the industry again. And all of those -- what makes it exciting, all of those are really the higher-acuity specialties, right? So these are primarily ortho-driven larger rooms. We have -- by the time we tell you about a JV de novo, we have every doctor we know who's invested. We have their checks. We know what that looks like, right? So these are syndicated opportunities with really great groups. The timing on this is, when you think about from the time that we get it syndicated, there's 12 to 18 months -- more like 18 months because of construction today, right? So you figure 18 months to get the facility open, 3 months to get it licensed, and then you're probably 3 to 6 months to kind of get it up to breakeven and really starting to produce. So you're right, early on, it's not going to be a margin-additive. However, these are really accretive investments, so cheaper than M&A take a lot longer, right? And they're with really top-notch, high-acuity docs. So I think when you think about from our -- from an investor standpoint, you'll start to see some of these coming into the model at the end of this year, really '25, you're going to see more of an impact. And as these ramp, there's roughly half of these where we'll have the opportunity to buy up over time to a majority position. So there is a multiyear contribution they'll make to margin. But you're right, early on, this is really a bunch of seeds we've planted that add a whole new level of growth for us that's going to be quite meaningful in the next 2 to 4 years.

Eric, you mentioned construction, right? And construction cost inflation have all increased. Does that change the trajectory of profitability on these?

Yes. So fortunately, for us, I mean, we actually -- these -- because we know so much about what -- who the doctors are, what the procedures are, we derisk these a lot. Even with a little higher interest rates and a little longer construction, these are still really, really accretive projects. And so on the margin, it might make them a little bit more expensive upfront. But really, it doesn't change our outlook on these at all based on the types of partnerships we're putting together.