What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2022-03-01 compared with 2021-03-10 · 59 added, 103 removed, 647 unchanged (20% of the section changed)

2 unchanged sentences

This summary does not address all of the risks that we face.

Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below under the heading “Risk Factors” and should be carefully considered, together with other information in this Annual Report and our other filings with the SEC, before making an investment decision regarding our common stock.

A discussion of the risks we face can be found below under the heading "Risk Factors" and should be carefully considered, together with other information in this Annual Report and our other filings with the SEC, before making an investment decision regarding our common stock.

COVID-19 and Other Potential Pandemic Risks

• The COVID-19 global pandemic continues to significantly affect our operations, business and financial condition, and our liquidity could continue to be negatively impacted further if the U.S.

economy remains unstable for a significant amount of time or it takes an extended period for patient volumes at our facilities to recover to pre-COVID-19 pandemic levels.

• The COVID-19 pandemic continues to significantly affect our operations, business and financial condition.

Business and Operational Risks

31 unchanged sentences

• Federal law restricts the ability of our surgical hospitals to expand surgical capacity.

• Companies within the health care industry, including us, continue to be the subject of federal and state audits and investigations, including actions for false and other improper claims.

• Companies within the health care industry continue to be the subject of federal and state audits and investigations, including actions for false and other improper claims.

• If we become subject to large malpractice or other legal claims, we could be required to pay significant damages, which may not be covered by insurance.

11 unchanged sentences

COVID-19 and Other Potential Pandemic Risks

The COVID-19 global pandemic continues to significantly affect our operations, business and financial condition, and our liquidity could continue to be negatively impacted further if the U.S.

economy remains unstable for a significant amount of time or it takes an extended period for patient volumes at our facilities to recover to pre-COVID-19 pandemic levels.

The COVID-19 pandemic continues to significantly affect our operations, business and financial condition.

The COVID-19 pandemic has significantly affected our facilities, employees, patients, communities, business operations and financial performance, as well as the U.S.

economy and financial markets.

The COVID-19 crisis is still rapidly evolving and much of its impact remains unknown and difficult to predict;

however, it has adversely affected our business operations since March, has materially impacted our financial performance for the remainder of 2020, and potentially could negatively impact our financial performance in 2021.

We continue to take or support measures to try to slow the spread and minimize the impact of the virus on our business.

Beginning mid-March, the COVID-19 pandemic began to negatively affect our net revenue and business operations.

Due in part to local, state and federal guidelines as well as recommendations from major medical societies regarding social distancing and self-quarantines in response to the COVID-19 pandemic, we cancelled or postponed a substantial percentage of the elective procedures scheduled at our facilities and reduced operating hours at a significant number of our facilities.

As a result, our facilities experienced significantly lower surgical case volume, which was more significant at the beginning of the second quarter and has improved gradually as states re-opened and allowed for non-emergent procedures.

The COVID-19 pandemic materially impacted our financial performance

for the years ended December 31, 2021 and 2020 and potentially could negatively impact our financial performance in 2022.

We cannot provide any certainty regarding the continuing effects of the impact of the COVID-19 pandemic, which is difficult to predict and is dependent on factors beyond our control.

The impact of the COVID-19 pandemic on our surgical facilities varies based on the market in which the facility operates, the type of surgical facility and the procedures that are typically performed.

It is difficult to predict the duration of this lower surgical case volume and, while governmental restrictions are continuing to ease in certain areas of the U.S., other areas are experiencing a surge in COVID-19 cases and may impose, re-impose or consider the imposition of additional restrictions in response.

We cannot predict the timing of the potential recapture of cancelled or postponed procedures, if any.

Even after taking into account actions that we are taking intended to increase financial flexibility, the volume reductions we have experienced have resulted in materially lower revenue and material decreases in income from operations during 2020, and may potentially continue to do so for subsequent quarters.

We cannot predict if or when utilization may return to pre-pandemic levels.

Additionally, some of our actions to increase liquidity could result in increased expenses, reduced employee morale, labor unrest and work stoppages or other workforce disruptions.

We experienced, and in the future could experience, supply chain disruptions, including shortages and delays, and could experience significant price increases, in equipment, pharmaceuticals and medical supplies, particularly personal protective equipment or PPE.

Staffing, equipment, and pharmaceutical and medical supplies shortages may also impact our ability to serve patients at our facilities.

Broad economic factors resulting from the current COVID-19 pandemic, including increasing unemployment rates and reduced consumer spending, could also negatively affect our payor mix, increase the relative proportion of lower margin services we provide and reduce patient volumes, as well as diminish our ability to collect outstanding receivables.

Our facilities experienced significantly lower surgical case volume in 2020 and parts of 2021.

It is difficult to predict the duration of this lower surgical case volume and, while governmental restrictions are continuing to ease in certain areas of the U.S., other areas are experiencing a surge in COVID-19 cases and variants of the virus and have imposed or may impose restrictions in response.

Our case volume, financial condition and results of operations may be adversely affected by existing or future federal or state laws, regulations, orders, or other governmental or regulatory actions addressing the current COVID-19 pandemic or the U.S.

health care system, including federal and state vaccine mandates or other requirements or restrictions.

Staffing, equipment, and pharmaceutical and medical supplies shortages, including vaccine mandates, may also impact our ability to serve patients at our facilities.

Broad economic factors resulting from the current COVID-19 pandemic, including increased unemployment rates and reduced consumer spending, could also negatively affect our payor mix, increase the relative proportion of lower margin services we provide and reduce patient volumes, as well as diminish our ability to collect outstanding receivables.

Business closings and layoffs in the areas in which we operate may lead to increases in the uninsured and underinsured populations and adversely affect demand for our services, as well as the ability of patients and other payors to pay for services as rendered.

Any increase in the amount or deterioration in the collectability of patient accounts receivable will adversely affect our cash flows and results of operations, requiring an increased level of working capital.

Any increase in the amount or deterioration in the collectability of patient accounts receivable may adversely affect our cash flows and results of operations, requiring an increased level of working capital.

If general economic conditions continue to deteriorate or remain uncertain or diminished for an extended period of time, our liquidity and ability to repay our outstanding debt may be harmed.

In addition, our results and financial condition may be further adversely affected by future federal or state laws, regulations, orders, or other governmental or regulatory actions addressing the current COVID-19 pandemic or the U.S.

health care system, which, if adopted, could result in direct or indirect restrictions to our business, financial condition, results of operations and cash flow.

The foregoing and other continued disruptions to our business as a result of the COVID-19 pandemic (including the potential resurgences of COVID-19 in jurisdictions currently engaged in reopening) have had and are likely to continue to have a material adverse effect on our business and could have a material adverse effect on our results of operations, financial condition, cash flows and our ability to service our indebtedness.

Finally, although we have received grants and accelerated payments under the CARES Act, we are reviewing and may seek any additional available benefits in the future under the CARES Act, the COVID-19 Economic Relief Bill (together, the “Relief Bills”) or other existing or any future legislation passed that could benefit us.

The foregoing and other continued disruptions to our business as a result of the COVID-19 pandemic (including the potential for additional resurgences of COVID-19 or its variants) have had and may to continue to have a material adverse effect on our business and may have a material adverse effect on our results of operations, financial condition, cash flows and our ability to service our indebtedness.

Although we have received grants and accelerated payments under the CARES Act, we are reviewing and may seek any additional available benefits in the future under the CARES Act, the COVID-19 Economic Relief Bill (together, the "Relief Bills") or other existing or any future legislation passed that could benefit us.

We cannot predict the manner in which such future benefits will be allocated or administered, and we cannot assure you that we will be able to access such benefits in a timely manner or at all.

1 unchanged sentence

Government or third party program administrators may be unable to cope with the volume of applications in the near term.

There can be no assurance that the implementation or interpretation of the provisions of the Relief Bills or other legislation will not change in ways that affect our funding or eligibility to participate, or that changes to the terms of such programs will not result in government recoupment of funds that were initially released to us as grants.

There can be no assurance that the implementation or interpretation of the provisions of the Relief Bills or other legislation will not change in ways that affect our funding or eligibility to participate, or that changes to the guidance on the recognition and certification of payments received will not result in government recoupment of funds that were initially released to us as grants.

Additionally, accessing these programs and our response to the COVID-19 pandemic have required our management team to devote extensive resources and is likely to continue to do so in the near future, which may negatively affect our ability to implement our business plan and respond to opportunities.

Furthermore, currently there is limited guidance available regarding the accounting treatment of funds that have been received by us and our facilities under the CARES Act.

This lack of guidance requires us to apply professional judgement and make certain estimates and assumptions with respect to the presentation, amount and timing of our recognition of grant funds received under the CARES Act.

For example, HHS published updated guidance in September 2020 regarding how we should apply grant funds, which required us to make

certain changes to our estimation procedures for the recognition of grant funds during the three months ended September 30, 2020.

Subsequently, in December 2020, the COVID-19 Economic Relief Bill was signed into law, which required us to make further changes to our estimation procedures for the recognition of grant funds again during the three months ended December 31, 2020.

We continue to monitor regulatory guidance published by HHS related to the required attestation guidance, which may require us to make additional changes to our estimation procedures for the recognition of grant funds in 2021.

A pandemic, epidemic or outbreak of a contagious disease in the markets in which we operate or that otherwise impacts our facilities could adversely impact our business.

9 unchanged sentences

We depend upon private and governmental third-party sources of payment for the services provided by physicians in our physician network and to patients in our surgical facilities, including surgical hospitals.

We derived approximately 39% in both 2020 and 2019 and 38% in 2018, of our revenue from government payors, including Medicare and Medicaid programs.

We derived approximately 43% in 2021 and 39% in both

2020 and 2019, of our revenue from government payors, including Medicare and Medicaid programs.

The amounts that we receive from the Medicare and Medicaid programs for our services are subject to statutory and regulatory changes, administrative rulings, interpretations and determinations concerning patient eligibility requirements, funding levels and the method of calculating payments or reimbursements, among other things;

9 unchanged sentences

If we are unable to negotiate and enter into favorable contracts or maintain satisfactory relationships and renew existing contracts on favorable terms with private insurance payors, our revenue and profitability may decrease.

Payments from private insurance payors, including state workers’ compensation programs and managed care organizations, represented approximately 54% in both 2020 and 2019 and 55% in 2018, of our patient service revenue.

Payments from private insurance payors, including state workers’ compensation programs and managed care organizations, represented approximately 51% in 2021 and 54% in both 2020 and 2019, of our patient service revenue.

Most of these payments came from private insurance payors with which our facilities have contracts.

11 unchanged sentences

If the proportion of our services subject to out-of-network fee schedules increases, we may experience a decrease in volume at our ASCs or other facilities due to fewer referrals of out-of-network patients.

Additionally, payments from workers’ compensation payors represented approximately 6% of our patient service revenue in both 2020 and 2019, and approximately 5% of our patient service revenues in 2018.

Additionally, payments from workers’ compensation payors represented approximately 5% of our patient service revenue in 2021, and approximately 6% of our patient service revenues in both 2020 and 2019.

A majority of states have implemented workers’ compensation provider fee schedules.

7 unchanged sentences

Generally speaking, certain types of our cases, such as orthopedic cases, generate relatively higher revenue than other types of cases, such as pain management and GI cases.

Therefore, a significant shift in our case mix toward a higher percentage of lower revenue cases, which could occur for reasons beyond our control, could result in a material adverse effect on our business, prospects, results of operations and financial condition.

Therefore, a significant shift in our case mix toward a higher percentage of lower

revenue cases, which could occur for reasons beyond our control, could result in a material adverse effect on our business, prospects, results of operations and financial condition.

Our case volume and surgical case mix may be adversely affected by patients’ unwillingness to pay for procedures in our facilities.

16 unchanged sentences

From time to time, we may have disputes with physicians who use our surgical facilities and/or own interests in our surgical facilities or our Company.

Our revenue and profitability could be significantly

reduced if we lost our relationship with one or more key physicians or groups of physicians, or if such key physician or group of physicians reduce their use of any of our surgical facilities.

Our revenue and profitability could be significantly reduced if we lost our relationship with one or more key physicians or groups of physicians, or if such key physician or group of physicians reduce their use of any of our surgical facilities.

In addition, any damage to the reputation of a key physician or group of physicians or the failure of these physicians to provide quality medical care or adhere to professional guidelines at our surgical facilities could damage our reputation, subject us to liability and significantly reduce our revenue.

12 unchanged sentences

If we are unable to successfully execute on this strategy in the future, our future growth could be limited.

We may be unable to identify suitable acquisition and development opportunities, or to complete acquisitions and new projects in a timely manner and on favorable terms.

unable to identify suitable acquisition and development opportunities, or to complete acquisitions and new projects in a timely manner and on favorable terms.

Further, the businesses or assets we acquire in the future may not ultimately produce returns that justify our related investment.

5 unchanged sentences

We also face significant competition from local, regional and national health systems and other owners of surgical facilities in pursuing attractive acquisition candidates.

The limited number of surgical facilities we develop typically incur losses in their early months of operation (more so in the case of surgical hospitals) and, until their case loads grow, they generally experience lower total revenue and operating margins than established surgical facilities, and we expect this trend to continue.

The limited number of surgical facilities we develop typically incur losses in their early months of operation (more so in the case of surgical hospitals) and, until their caseloads grow, they generally experience lower total revenue and operating margins than established surgical facilities, and we expect this trend to continue.

If we are not successful in integrating the operations and personnel of newly acquired surgical facilities in a timely and efficient manner, then the potential benefits of the transaction may not be realized and our operations and earnings could be materially adversely impacted.

7 unchanged sentences

To accommodate our past and anticipated future growth, and to compete effectively, we will need to continue to improve our management, operational and financial information systems and to expand, train, manage and motivate our workforce.

Our personnel, systems, procedures or controls

may not be adequate to support our operations in the future.

Our personnel, systems, procedures or controls may not be adequate to support our operations in the future.

Further, focusing our financial resources and management attention on the expansion of our operations may negatively impact our financial results.

47 unchanged sentences

Our surgical facilities are sensitive to regulatory, economic and other conditions in the states where they are located.

Our revenue is particularly sensitive to regulatory, economic and other conditions in the states of Georgia and Texas.

As of December 31, 2020, we owned and operated nine consolidated surgical facilities in Texas and six consolidated surgical facilities in Georgia.

The Texas facilities represented approximately 14% of our revenue in fiscal 2020 and the Georgia facilities represented approximately 11% of our revenue in fiscal 2020.

Our revenue is particularly sensitive to regulatory, economic and other conditions in the state of Texas.

As of December 31, 2021, we owned and operated nine consolidated surgical facilities in Texas.

The Texas facilities represented approximately 13% of our revenue in fiscal 2021.

In addition, we own and operate three consolidated surgical facilities in Idaho, representing approximately 26% of our revenue during fiscal 2021.

54 unchanged sentences

Our ability to achieve profitability will be affected by the other risks and uncertainties described in this section and in "Management’s Discussion and Analysis of Financial Condition and Results of Operations," included elsewhere in this Annual Report.

All of these factors could contribute to future net losses and, if we are unable to meet these risks

and challenges as we encounter them, our business may suffer.

All of these factors could contribute to future net losses and, if we are unable to meet these risks and challenges as we encounter them, our business may suffer.

If we are not able to achieve, sustain or increase profitability, our business will be adversely affected and our stock price may decline.

64 unchanged sentences

Although most of our intercompany loans are secured by the assets of the partnership or limited liability company, the physicians and physician groups that own an interest in these partnerships and limited liability companies generally do not guarantee a pro rata amount of this debt or the other obligations of these partnerships and limited liability companies.

From time to time, we may guarantee our pro-rata share of the third-party debts and other obligations of our non-wholly owned non-consolidated partnerships and limited liability companies in which we own an interest in an amount proportionate to our pro rata share of

the equity interests issued by such entity.

In such instances, the physicians and/or physician groups typically also guarantee their pro-rata share of such indebtedness.

2 unchanged sentences

If interest rates increase, our debt service obligations on variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income and cash flows, including cash available for servicing our indebtedness, would correspondingly decrease.

We periodically enter into interest rate swap agreements to manage our exposure to these fluctuations.

Our interest rate swap agreements involve the exchange of fixed and variable rate interest payments between two parties, based on common notional principal amounts and maturity dates.

The notional amounts of the swap agreements represent balances used to calculate the exchange of cash flows and are not our assets or liabilities.

We periodically enter into interest rate swap agreements and interest rate cap agreements to manage our exposure to these fluctuations.

Our interest rate swap agreements and interest rate cap agreements involve the exchange of fixed and variable rate interest payments between two parties, based on common notional principal amounts and maturity dates.

The notional amounts of the swap and cap agreements represent balances used to calculate the exchange of cash flows and are not our assets or liabilities.

Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations.

6 unchanged sentences

The United Kingdom’s Financial Conduct Authority, which regulates LIBOR, has announced that it intends to phase out LIBOR by June 2023.

If the phase out occurs as planned, the interest rate applicable to our variable rate debt may be calculated based on an alternative, comparable or successor rate which may have a material adverse impact on the cost of the variable rate portion of our indebtedness.

If the phase out occurs as planned, the interest rate applicable to our variable rate debt may be calculated based on an alternative, comparable or

successor rate which may have a material adverse impact on the cost of the variable rate portion of our indebtedness.

The timing and result of the phase out of LIBOR are unclear, and efforts of industry groups to develop a suitable successor are not guaranteed to result in a viable or widely adopted replacement for LIBOR.

13 unchanged sentences

These limitations, when combined with amounts allowable due to net unrecognized built in gains, are not expected to impact the realization of the deferred tax assets associated with these NOLs.

$516.2 million of our federal NOL carryforwards will begin to expire in 2026 and will completely expire in 2037.

The remaining federal NOL carryforwards, which were generated subsequent to 2017, do not expire.

Our state NOL carryforwards will begin to expire in 2021 and will completely expire in 2040.

The Company has $478.3 million of federal NOL carryforwards that will begin to expire in 2029 and will completely expire in 2037.

The remaining federal NOL carryforwards, which were generated after 2017, do not expire.

Our state NOL carryforwards will expire between 2022 and 2041.

Future ownership changes may subject our NOL carryforwards to further annual limitations, which could restrict our ability to use them to offset our taxable income in periods following the ownership changes.

16 unchanged sentences

Our stock price could be volatile, and, as a result, our stockholders may not be able to resell their shares at or above the price paid for them.

Since our initial public offering, the price of our common stock as reported on The Nasdaq Global Select Market has ranged from a low of $4.00 on March 18, 2020 to a high of $42.87 on February 2, 2021.

Since our initial public offering, the price of our common stock as reported on The Nasdaq Global Select Market has ranged from a low of $4.00 on March 18, 2020 to a high of $69.58 on June 25, 2021.

The price of our common stock could be subject to fluctuations in response to a number of factors, including those described elsewhere in this report and others such as:

6 unchanged sentences

• the passage of legislation or other regulatory developments affecting us or our industry;

• our limited public float;

• speculation in the press or investment community;

5 unchanged sentences

This type of litigation could result in substantial costs and divert our management’s attention and resources, and could also require us to make substantial payments to satisfy judgments or to settle litigation.

For example, see Part I, Item 3.

Legal Proceedings - Stockholder Litigation.

For example, see Note 14.

"Commitments and Contingencies - Stockholder Litigation" to our consolidated financial statements included elsewhere in this report.

Cybersecurity and Data Risks

2 unchanged sentences

Information security risks have generally increased in recent years because of threats from malicious persons and groups, new vulnerabilities, the proliferation of new technologies and the increased sophistication and activities of perpetrators of cyber-attacks.

A failure in or breach of our operational or information security systems as a result of cyber-attacks or information security breaches could disrupt our business,

result in the loss, disclosure or misuse of confidential or proprietary information, damage our reputation, increase our costs or lead to fines and financial losses.

A failure in or breach of our operational or information security systems as a result of cyber-attacks or information security breaches could disrupt our business, result in the loss, disclosure or misuse of confidential or proprietary information, damage our reputation, increase our costs or lead to fines and financial losses.

As a result, cybersecurity and the continued development and enhancement of the controls and processes designed to protect our systems, computers, software, data and networks from attack, damage or unauthorized access remain a priority for us.

13 unchanged sentences

Notification must also be made to HHS and, in certain situations involving large breaches, to the media.

The HIPAA rules created a presumption that all non-permitted uses or disclosures of unsecured protected health information are breaches.

The HIPAA rules created a presumption that all non-

permitted uses or disclosures of unsecured protected health information are breaches.

HIPAA imposes mandatory civil and criminal penalties for violations of its requirements ranging up to $50,000 per violation, with a maximum civil penalty of $1.5 million in a calendar year for violations of the same requirement.

46 unchanged sentences

The Affordable Care Act also reforms certain aspects of health insurance, quality of care and fraud and abuse enforcement.

Substantial uncertainty remains regarding the net effect of the Affordable Care Act on our business because the long-term impact of a number of factors, including the following, remains unclear:

• the responses of individuals, businesses and other market participants to the evolving choices and obligations under the Affordable Care Act;

• the states’ decisions whether to implement the Medicaid expansion provisions of the Affordable Care Act, and under what terms;

• the effect of value-based purchasing and other quality programs established under the Affordable Care Act;

• the scope and nature of changes to Medicare reimbursement methods and programs, including accountable care organizations, bundled payment programs and other coordinated care models;

• the financial sustainability of the Health Insurance Marketplace, which may be impacted by whether a sufficient number of payors participate;

• our ability to participate in health insurance plans offered through the Health Insurance Marketplaces and the terms of our participation;

• the net effect of reductions in federal health care program spending under the Affordable Care Act;

• the resolution of new and ongoing legislative and legal challenges to the Affordable Care Act.

As a result of the enactment of the Tax and Jobs Act of 2017, the tax penalty for failure to comply with the "individual mandate" was reduced to zero as of calendar year 2019, effectively repealing the mandate itself.

The reduction to zero of the individual mandate tax penalty and any other future repeal or replacement of the Affordable Care Act or any component thereof may have significant impact on the reimbursement for health care services generally, and may cause more individuals to become uninsured, rendering them unable to afford health care services offered by the Company.

In addition to proposed legislative changes to the Affordable Care Act, there remains ongoing litigation seeking to repeal the Affordable Care Act in whole or in part.

Supreme Court recently agreed to hear a case that seeks to invalidate the Affordable Care Act, but it will not issue an opinion until 2021.

Initiatives to repeal the Affordable Care Act, in whole or in part, and to offer amendments or supplements to modify its provisions have been persistent and increased as a result of the 2016 election;

however, the results of the 2020 election substantially reduce the likelihood of any successful attempt to repeal the law within the next two years.

Because of the many variables involved, we are unable to predict the net effect of the Affordable Care Act and other associated changes within the health care industry on us or our operations.

The Affordable Care Act continues to be the subject of legal and legislative challenges.

Depending on how the Affordable Care Act continues to be interpreted, implemented or changed, it could have a material adverse effect on our business, prospects, results of operations and financial condition.

82 unchanged sentences

and medical necessity of services provided.

In addition, the OIG and the U.S.

Department of Justice ("DOJ") have, from time to time, undertaken national enforcement initiatives that focus on specific billing practices or other suspected areas of abuse.

In addition, the OIG and the DOJ have, from time to time, undertaken national enforcement initiatives that focus on specific billing practices or other suspected areas of abuse.

In its 2013 Work Plan, the OIG stated its intention to review the safety and quality of care for Medicare beneficiaries having surgeries and procedures in ASCs and hospital outpatient departments.

5 unchanged sentences

The statute defines "knowingly" to include not only actual knowledge of a claim’s falsity, but also reckless disregard for or intentional ignorance of the truth or falsity of a claim.

Violators of the FCA are subject to severe financial penalties,

including treble damages and per claim penalties in excess of $10,000.

Violators of the FCA are subject to severe financial penalties, including treble damages and per claim penalties in excess of $10,000.

Because our facilities perform hundreds or thousands of similar procedures each year for which they are paid by Medicare, and since the statute of limitations for such claims extends for six years under normal circumstances (and possibly as long as ten years in the event of failure to discover material facts), a repetitive billing error or cost reporting error could result in significant, material repayments and civil or criminal penalties.

Moreover, another trend impacting health care providers is the increased use of the FCA, particularly by individuals who bring actions under that law.

Under the "qui tam," or whistleblower, provisions of the FCA, private parties may bring actions on behalf of the federal government.

Under the "qui tam," or whistleblower, provisions of the FCA, private parties may bring actions on behalf of the federal

If the government intervenes and prevails in the action, the defendant may be required to pay three times the actual damages sustained by the government, plus mandatory civil monetary penalties of between $11,803 and $23,607 for each false claim submitted to the government.

24 unchanged sentences

As such, the resolution of these audits could have a material adverse effect on our business, prospects, results of operations and financial condition.

On October 23, 2017, the Company received a series of civil investigative demands ("CIDs") from the federal government under the FCA for documents and information dating back to January 1, 2010 relating to the medical necessity of certain drug tests conducted by the

Company’s physicians and submitted to laboratories owned and operated by the Company.

In addition, the Company was informed by CMS that payments to its diagnostic laboratory, Logan Laboratories, were suspended for a period of time, pending further investigations by CMS.

CMS lifted the suspension as of December 18, 2019.

On January 23, 2020, the U.S.

District Court for the Middle District of Florida unsealed the Complaint in the case of Cho et al.

United States v.

Surgery Partners et al., which we understand to be related to the investigation that gave rise to the CIDs.

On April 14, 2020, the Company entered into a settlement agreement (the "Settlement Agreement") with the United States of America, acting through the DOJ.

Under the terms of the Settlement Agreement, the Company still owes payment of $30.7 million plus accrued interest as of April 1, 2021.

For additional information, please refer to Note 14.

"Commitments and Contingencies" to our audited financial statements included elsewhere in the report.

We may become involved in litigation which could negatively impact the value of our business.

40 unchanged sentences

In many of the states in which we currently operate, certificates of need must be obtained for capital expenditures exceeding a prescribed amount, changes in capacity or services offered and various other matters.

The remaining states in which we now or may in the future operate may adopt similar legislation.

The remaining states in which we now or may in the future operate may adopt

similar legislation.

Our costs of obtaining a certificate of need could be significant, and we cannot assure you that we will be able to obtain the certificates of need or other required approvals for additional or expanded surgical facilities or services in the future.

5 unchanged sentences

Violations of federal or state antitrust laws can result in various sanctions, including criminal and civil penalties.

Antitrust enforcement in the health care industry is currently a priority of the Federal Trade Commission (the "FTC").

Antitrust enforcement in the health care industry is currently a priority of the FTC.

We believe we are in compliance with federal and state antitrust laws, but courts or regulatory authorities may reach a determination in the future that could have a material adverse effect on our business, prospects, results of operations and financial condition.

17 unchanged sentences

Even if Bain Capital ceases to beneficially own a majority of the voting power of our common stock, it will continue to be able to strongly influence or effectively control our decisions.

Provisions in the certificate of designation governing our preferred stock and in our charter documents and Delaware law may deter takeover efforts that could be beneficial to stockholder value.

Our certificate of incorporation and by-laws, the certificate of designation governing our preferred stock and Delaware law contain provisions that could make it harder for a third party to acquire us, even if doing so might be beneficial to our stockholders.

Provisions in our charter documents and Delaware law may deter takeover efforts that could be beneficial to stockholder value.

Our certificate of incorporation and by-laws and Delaware law contain provisions that could make it harder for a third party to acquire us, even if doing so might be beneficial to our stockholders.

The provisions in our organizational documents include a classified board of directors and limitations on actions by our stockholders.

In addition, our board of directors has the right to issue additional preferred stock without stockholder approval that could be used to dilute a potential hostile acquiror.

Our certificate of incorporation also imposes some restrictions on mergers and other business combinations between us and any holder of 15.0% or more of our outstanding common stock other than affiliates of Bain Capital.

Finally, our 10% Series A Convertible Perpetual Participating Preferred Stock accrues conversion value for each quarter it is outstanding and is subject, under certain circumstances, to a redemption premium, which could significantly increase the cost to a potential acquirer of buying all of the outstanding securities of the Company.

In addition, our board of directors has the right to issue preferred stock without stockholder approval that could be used to dilute a potential hostile acquiror.

Our certificate of incorporation also imposes some restrictions on mergers and other business combinations between us and any holder of 15.0% or more of our outstanding common stock other than

affiliates of Bain Capital.

As a result of these features, our stockholders may lose their ability to sell their stock for a price in excess of the prevailing market price, and efforts by stockholders to change the direction or management of the Company may be unsuccessful.

9 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors