Free Cash Flow
Q: Will free cash flow normalize soon?
A: Management expects operating cash flows to improve in later quarters as seasonal timing normalizes, though a 220 basis point headwind from the new interest rate cap will impact near-term cash flow.

Leverage Targets
Q: What are your M&A and leverage goals?
A: They plan to deploy around $200M in M&A annually with leverage trending down toward 3x as earnings grow and cash generation strengthens.

Utilization Trends
Q: Are utilization trends sustainable?
A: Executives pointed to strong case volume and robust specialty performance, noting that same-store revenue growth reflects a mix of volume increases and scheduled lower-revenue procedures while staying within expected ranges.

Tariff Exposure
Q: How is tariff risk managed?
A: With about 70% of spend routed through HealthTrust and transparent contracting, management sees no material tariff exposure in the near to midterm.

Acquisition Timing
Q: When will acquisitions affect same-store metrics?
A: Facilities acquired mid-year are incorporated into same-store calculations once fully operational, typically starting in the third quarter.

Acquisitions & De novos
Q: How are acquisitions and de novos structured?
A: Recent acquisitions have been consolidated immediately, while de novos launch unconsolidated—with a target of 10 under development annually—providing additional growth at lower entry costs.

Operating Efficiency
Q: What drives margin expansion?
A: Improved operating systems through standardized revenue cycle processes and better data integration in supply chain management are expected to enhance margins over time.

Payer Mix & Pricing
Q: Is there a negative payer mix impact?
A: Management reported stable payer mix and competitive pricing, with no significant adverse changes despite minor rate pressures from increases in lower-revenue GI procedures.

Labor & Expenses
Q: How are pro fees and labor trends evolving?
A: Professional fee levels align with anticipated costs from prior acquisitions, and anesthesia labor conditions remain generally unaffected, keeping overall expense trends on track.

Recruiting Quality
Q: How is your physician recruiting performing?
A: The latest recruiting class has generated about 14% higher revenue per doctor, showing improved quality across specialties even though the precise high-acuity mix isn’t detailed.

GI Mix Impact
Q: What is the GI mix’s revenue impact?
A: While an increased share of lower-revenue GI cases has slightly pressured average rates, the overall volume remains robust and in line with growth expectations.

Cardiac Growth
Q: How is cardiac growth progressing?
A: Cardiac procedures are growing slowly at first, with new cath lab-based centers starting up, signaling modest short-term progress with strong long-term potential.

Weather Impact
Q: Did weather affect performance this quarter?
A: Management noted that weather had an immaterial effect on case volumes, with its impact being negligible compared to overall performance.