What changed in this filing

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Item 1A. Risk Factors

2026-03-02 compared with 2025-03-07 · 51 added, 47 removed, 472 unchanged (17% of the section changed)

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Legal and Regulatory Risks

• We cannot predict the effect that changes in healthcare laws, regulations, policies and government programs may have on our business, financial condition or results of operations.

• If we fail to comply with or otherwise incur liabilities under the numerous federal and state laws and regulations relating to the operation of our facilities, we could incur significant penalties or other costs or be required to make significant changes to our operations.

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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 41% of our revenue from government payors, including Medicare and Medicaid programs in 2024 and 42% in both 2023 and 2022.

We derived approximately 43%, 41% and 42% of our revenue from government payors, including Medicare and Medicaid programs in 2025, 2024 and 2023, respectively.

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;

refinements to the Medicare Ambulatory Surgery Center payment system and refinements made by CMS to Medicare’s reimbursement policies;

refinements to the Medicare Ambulatory Surgery Center payment system and refinements made by

CMS to Medicare’s reimbursement policies;

requirements for utilization review;

and federal and state funding restrictions;

could materially adversely affect payments we receive from these government programs, as well as affect the timing of payments to our facilities.

any of which could materially adversely affect payments we receive from these government programs, as well as affect the timing of payments to our facilities.

During the past several years, health care payors, such as federal and state governments, insurance companies and employers, have undertaken initiatives to revise payment methodologies and monitor health care costs.

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Since, generally speaking, we receive relatively higher payment rates from private insurers than Medicare, Medicaid and other government-funded programs, a significant shift in our payor mix toward a higher percentage of Medicare and Medicaid cases, which could occur for reasons beyond our control, could have an adverse effect on our business, prospects, results of operations and financial condition.

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.

Additionally, 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.

Higher numbers of unemployed individuals generally translates into more individuals without health care insurance to help pay for procedures, thereby increasing the potential for persons to elect not to have procedures performed.

Even procedures normally thought to be

non-elective may be delayed or may not be performed if the patient cannot afford the procedure due to a lack of insurance or money to pay their portion of our facilities’ fee.

Higher numbers of unemployed individuals generally translates into more individuals without health care insurance to help pay for

procedures, thereby increasing the potential for persons to elect not to have procedures performed.

Even procedures normally thought to be non-elective may be delayed or may not be performed if the patient cannot afford the procedure due to a lack of insurance or money to pay their portion of our facilities’ fee.

It is difficult to predict the degree to which our business will continue to be impacted by economic conditions in the future.

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Rather, these shifts may be concentrated within certain markets due to local competitive factors.

In addition, we are unable to predict the results of an increasing trend towards value based payment on our reimbursement.Therefore, the results of our individual affiliated facilities, including facilities that are material to our results, may be volatile, which could result in a material adverse effect on our business, prospects, results of operations and financial condition.

In addition, we are unable to predict the results of an increasing trend towards value based payment on our reimbursement.

Therefore, the results of our individual affiliated facilities, including facilities that are material to our results, may be volatile, which could result in a material adverse effect on our business, prospects, results of operations and financial condition.

Our ability to provide medical services at our facilities would be impaired and our revenue reduced if we are not able to maintain good relationships with affiliated physicians who utilize our surgical facilities.

Our business depends, among other things, upon the efforts and success of affiliated physicians who provide medical services at our surgical facilities and the strength of our relationships with these physicians.

We generally do not enter into contracts with physicians who use our surgical facilities, other than partnership and operating agreements with physicians who own interests in our surgical facilities, agreements for anesthesiology services and medical director agreements.

Most physicians are not employees of our surgical facilities and are not contractually required to use our facilities.

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If we experience the loss of key personnel or if the effort devoted to the integration of acquired facilities diverts significant management or other resources from other operational activities, our operations could be impaired.

Additionally, in some acquisitions, we

may have to renegotiate, or risk losing, one or more of the facility’s private insurance contracts.

We may also be unable to immediately collect the accounts receivable of an acquired facility while we align the payors’ payment systems and accounts with our own systems.

Additionally, in some acquisitions, we may have to renegotiate, or risk losing, one or more of the facility’s private insurance contracts.

We may also be unable to immediately

collect the accounts receivable of an acquired facility while we align the payors’ payment systems and accounts with our own systems.

Finally, certain transactions can require licensure changes which, in turn, result in disruptions in payment for services.

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In some markets, the lack of availability of clinical personnel, such as nurses, has become a significant operating issue facing all health care providers.

This shortage may require us to continue to enhance wages and benefits to recruit and retain qualified personnel or to contract for more expensive

temporary personnel.

This shortage may require us to continue to enhance wages and benefits to recruit and retain qualified personnel or to contract for more expensive temporary personnel.

We also depend on the available labor pool of semi-skilled and unskilled workers in each of the markets in which we operate.

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Certain of our partnership and operating agreements contain provisions giving rights to our partners and other members that may be adverse to our interests.

Certain of the agreements governing the limited partnerships ("LPs"), general partnerships ("GPs") and limited liability companies ("LLCs") through which we own and operate our facilities contain provisions that give our partners or other members rights that may, in certain circumstances, be adverse to our interests.

Certain of the agreements governing the limited partnerships ("LPs"), limited liability partnerships ("LLPs"), general partnerships ("GPs") and limited liability companies ("LLCs") through which we own and operate our facilities contain provisions that give our partners or other members rights that may, in certain circumstances, be adverse to our interests.

These rights include, but are not limited to, rights to purchase our interest in the partnership or LLC, rights to require us to purchase the interests of our partners or other members, or rights requiring the consent of our partners and other members prior to our transferring our ownership interest in a facility or prior to a change in control of us or certain of our subsidiaries.

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We may have a special legal responsibility to the holders of ownership interests in the entities through which we own our facilities, which may conflict with, and prevent us from acting solely in, our own best interests or the interests of our stockholders.

We generally hold our ownership interests in facilities through LPs, GPs, LLCs or limited liability partnerships ("LLPs") in which we maintain an ownership interest along with physicians and, in some cases, both physicians and health systems.

We generally hold our ownership interests in facilities through LPs, LLPs, GPs, and LLCs in which we maintain an ownership interest along with physicians and, in some cases, both physicians and health systems.

As general partner and manager of most of these entities, we may have a fiduciary duty, to manage these entities in the best interests of the other owners.

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These different payors typically have different billing requirements that must be satisfied prior to receiving payment for services rendered.

Reimbursement is typically conditioned on our documenting medical

necessity and correctly applying diagnosis codes.

Reimbursement is typically conditioned on our documenting medical necessity and correctly applying diagnosis codes.

Incorrect or incomplete documentation and billing information could result in non-payment for services rendered.

The primary collection risks with respect to our patient receivables relate to patient accounts for which the primary third-party payor has paid the amounts covered by the applicable agreement, but patient responsibility amounts (deductibles and co-payments) remain outstanding.

The primary collection risks with respect to our patient receivables relate to patient accounts for which the

primary third-party payor has paid the amounts covered by the applicable agreement, but patient responsibility amounts (deductibles and co-payments) remain outstanding.

Additional factors that could complicate our billing include:

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As of December 31, 2025, we and our subsidiaries had approximately $3.7 billion aggregate principal amount of indebtedness outstanding, which includes approximately $1.4 billion principal amount of senior secured term loans (the "Term Loan") outstanding and $1,225.0 million senior unsecured notes due 2032 (the "2032 Unsecured Notes").

As of December 31, 2024, we had $192.0 million of outstanding borrowings under our $703.8 million senior secured revolving credit facility (the "Revolver" and, together with the Term Loan, the "New Secured Credit Facilities" and, together with the 2032 Unsecured Notes, the "Senior Indebtedness").

As of December 31, 2025, we had no outstanding

borrowings under our $703.8 million senior secured revolving credit facility (the "Revolver" and, together with the Term Loan, the "Secured Credit Facilities" and, together with the 2032 Unsecured Notes, the "Senior Indebtedness").

After giving effect to the $11.0 million principal amount of outstanding letters of credit issued under our Revolver, we had $692.8 million of unused commitments available to be borrowed under the Revolver.

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As a result of these and other covenants and restrictions, we may be limited in how we conduct our business.

In addition, we may be required to maintain a specified financial maintenance ratio in connection with the Senior Indebtedness if the Revolver is utilized in excess of a specified threshold.

In addition, we may be required to maintain a specified financial maintenance ratio in connection with the Senior Indebtedness if the Revolver is utilized in excess

of a specified threshold.

The terms of any future indebtedness we may incur could include more restrictive covenants.

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We and our subsidiaries may be able to incur additional indebtedness in the future, including secured indebtedness.

Although the credit agreement governing the New Credit Facilities and the indentures governing the 2032 Unsecured Notes contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of significant qualifications and exceptions, and the indebtedness incurred in compliance with these restrictions could be substantial.

Although the credit agreement governing the Secured Credit Facilities and the indentures governing the 2032 Unsecured Notes contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of significant qualifications and exceptions, and the indebtedness incurred in compliance with these restrictions could be substantial.

In addition, as of December 31, 2025, we had approximately $692.8 million available for additional borrowings under the Revolver (after giving effect to the $11.0 million aggregate principal amount of outstanding letters of credit issued under our Revolver at such time).

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We are a holding company, and our ability to service our debt is dependent upon the earnings from the business conducted by our subsidiaries that operate the surgical facilities.

The effect of this structure is that we depend on the earnings of our subsidiaries, and the distribution or payment to us of a portion of these earnings to meet our obligations, including those under the Term Loans and Revolver and any of our other debt obligations.

The effect of this structure is that we depend on the earnings of our subsidiaries, and the distribution or payment to us of a portion of these earnings to meet our obligations, including those under the Senior Indebtedness and any of our other debt obligations.

The distributions of those earnings, advances or other distributions of funds by these entities to us, all of which are contingent upon our subsidiaries’ earnings, are subject to various business considerations.

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We make significant loans to, and are generally liable for debts and other obligations of, the partnerships and limited liability companies that own and operate some of our surgical facilities.

We own and operate our surgical facilities through limited partnerships and limited liability companies.

Local physicians, physician groups and health care systems also own an interest many of these partnerships and limited liability companies.

For some of our surgical facilities, indebtedness at the partnership level is funded through intercompany loans that we provide.

For some of our surgical facilities, indebtedness at the partnership, or LLC level is funded through intercompany loans that we provide.

At December 31, 2025, our intercompany loans totaled $44.2 million.

Through these loans we may have a security interest in the partnership’s or limited liability company’s assets, depending upon the terms thereof in each instance.

Through these loans we may have a security interest in the partnership’s or LLC's assets, depending upon the terms thereof in each instance.

However, our financial condition and results of operations would be materially adversely affected if our surgical facilities are unable to repay these intercompany loans, or such loans are challenged under certain health care laws.

Additionally, at December 31, 2025, our global intercompany note, which we use to transfer debt balances between our subsidiaries, had a zero balance.

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.

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

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 LLCs 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.

Our variable rate indebtedness subjects us to interest rate risk, which could cause our indebtedness service obligations to increase significantly.

Borrowings under the Credit Facilities are at variable rates of interest and expose us to interest rate risk.

Borrowings under the Secured Credit Facilities are at variable rates of interest and expose us to interest rate risk.

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.

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For example, HHS issued a Notice of Proposed Rulemaking on January 6, 2025, which proposes changes to the HIPAA security regulations aimed at enhancing cybersecurity protections in the healthcare sector;

however, as of December 31, 2025, HHS had yet to publish a final rule formalizing the January 2025 proposals.

Our facilities will continue to remain subject to any federal or state privacy-related laws that are more restrictive than the privacy regulations issued under HIPAA.

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New health information standards could have a significant effect on the manner in which we do business, and the cost of complying with new standards could be significant.

We may not remain in compliance with the diverse privacy requirements in all of the jurisdictions in which we do business.

We may not remain in

compliance with the diverse privacy requirements in all of the jurisdictions in which we do business.

If we fail to comply with HIPAA or similar state laws, we could incur substantial civil monetary or criminal penalties.

Legal and Regulatory Risks

We cannot predict the effect that changes in healthcare laws, regulations, policies and government programs may have on our business, financial condition or results of operations.

Over the past several years, various laws and regulations lengthened the enrollment period, expanded income eligibility, and reduced premium caps for subsidies for individuals purchasing Affordable Care Act coverage through state and federal marketplaces.

However, several of these provisions – notably, those relating to premium caps for subsidies – expired on December 31, 2025.

The failure of Congress to renew these subsidies through legislative action is widely anticipated to result in significant increases in premiums, potentially leading to decreased enrollment and a corresponding rise in the number of uninsured individuals or a shift of individuals from commercial coverage to government program coverage in 2026.

As a direct effect of these changes, the Company may experience decreased patient volumes, reduced revenues and an increase in uncompensated care, which would adversely affect the Company’s results of operations and cash flows.

We cannot predict whether or how the Congress may further extend (or decline to extend) or modify provisions of or relating to the Affordable Care Act or other laws affecting the healthcare industry generally, nor can we predict how the current administration will influence, promulgate or implement rules, regulations or executive orders that affect the healthcare industry directly or indirectly (including, for example, through changes resulting from the provisions of the OBBBA).

We may also experience potential impacts on our business, in ways we cannot anticipate, from healthcare-related policy changes at the state level.

Some federal and state changes, initiatives and requirements could, among other things, negatively impact our patient volumes, case mix and revenue mix, increase our operating costs, adversely affect the reimbursement we receive for our services, impact our competitive position or require us to expend resources to modify certain aspects of our operations, any of which could have an adverse effect on our financial condition, results of operations or cash flows.

Furthermore, we cannot predict the impact healthcare policy risks and uncertainties may have on the trading price of our common stock.

If we fail to comply with or otherwise incur liabilities under the numerous federal and state laws and regulations relating to the operation of our facilities, we could incur significant penalties or other costs or be required to make significant changes to our operations.

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In addition, some of the governmental and regulatory bodies that regulate us are considering or may in the future consider enhanced or new regulatory requirements.

These authorities may also seek to exercise their supervisory or

enforcement authority in new or more robust ways.

These authorities may also seek to exercise their supervisory or enforcement authority in new or more robust ways.

All of these possibilities, if they occurred, could detrimentally affect the way we conduct our business and manage our capital, either of which, in turn, could have a material adverse effect on our business, prospects, results of operations and financial condition.

We cannot predict the effect that health care reform and other changes in government programs may have on our business, financial condition or results of operations.

The Affordable Care Act has changed and continues to change how health care services are covered, delivered and reimbursed through, among other things, expanded coverage of uninsured individuals, reduced growth in Medicare program spending and the establishment and expansion of programs tying reimbursement to quality and clinical integration.

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

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.

If regulations change, we may be obligated to purchase some or all of the ownership of our physician partners or renegotiate some of our partnership and operating agreements with our physician partners and management agreements with surgical facilities.

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If we fail to comply with physician self-referral laws as they are currently interpreted or may be interpreted in the future, or if other legislative restrictions are issued, we could incur substantial monetary penalties and a significant loss of revenue.

We attempt to structure our relationship with physicians who refer to our hospitals to meet an exception to the Stark Law where required, but the regulations implementing the exceptions are detailed and complex, and we cannot guarantee that every relationship

complies fully with the Stark Law.

We attempt to structure our relationship with physicians who refer to our surgical hospitals to meet an exception to the Stark Law where required, but the regulations implementing the exceptions are detailed and complex, and we cannot guarantee that every relationship complies fully with the Stark Law.

We also believe that certain services provided by our managed physician network are covered by the Stark Law, but referrals for those services are exempt from the Stark Law under its "in-office ancillary services exception," among others.

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Violations of the Stark Law will also create liability under the federal False Claims Act.

Exclusion of our ASCs or hospitals from these programs through judicial or agency interpretation of existing laws or additional legislative restrictions on physician ownership or investments in health care entities could result in a significant loss of reimbursement revenue.

Exclusion of our ASCs or surgical hospitals from these programs through judicial or agency interpretation of existing laws or additional legislative restrictions on physician ownership or investments in health care entities could result in a significant loss of reimbursement revenue.

We cannot provide assurances that CMS will not undertake other rulemaking to address additional revisions to or interpretations of the Stark Law regulations.

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Although this prohibition applies only to federal health care program beneficiaries, the routine waivers of copayments and deductibles offered to patients covered by commercial payors may implicate applicable state laws related to, among other things, unlawful schemes to defraud, excessive fees for services, tortious interference with patient contracts and statutory or common law fraud.

To the extent our patient assistance programs or other discount policies are found to be inconsistent with applicable laws, we may be required to restructure or discontinue such programs, or be subject to other significant penalties.

To the extent our patient assistance programs or other discount policies are found to

be inconsistent with applicable laws, we may be required to restructure or discontinue such programs, or be subject to other significant penalties.

All payors are increasingly conducting post-payment audits.

For example, CMS has implemented the RAC program, involving Medicare claims audits nationwide, and employs MICs to perform post-payment audits of Medicaid claims and identify overpayments.

addition to RACs and MICs, the state Medicaid agencies and other contractors have increased their review activities.

In addition to RACs and MICs, the state Medicaid agencies and other contractors have increased their review activities.

We are regularly subject to these external audits and we also perform both internal and third-party audits and monitoring.

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Additionally, payments to hospitals are adjusted based on the hospital’s performance on these quality measures.

A substantial portion of hospital payment is at risk depending on its individual performance

relative to benchmarks and other hospitals’ performance.

A substantial portion of hospital payment is at risk depending on its individual performance relative to benchmarks and other hospitals’ performance.

There is a substantial risk that our Medicare payments could be reduced if our hospitals fail to perform adequately on these measures.

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Our amended and restated certificate of incorporation designates courts in the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (iii) any action asserting a claim against us arising pursuant to any provision of the General Corporation Law of the State of Delaware, our Certificate of Incorporation or our amended and restated bylaws or (iv) any other action asserting a claim against us that is governed by the internal affairs doctrine (each, a "Covered Proceeding").

Our amended and restated certificate of incorporation (the "Certificate of Incorporation") provides that, subject to certain exceptions and to the fullest extent permitted by applicable law, the Court of Chancery of the State of Delaware (the "Court of Chancery") will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (iii) any action asserting a claim against us arising pursuant to any provision of the General Corporation Law of the State of Delaware, our Certificate of Incorporation or our amended and restated bylaws or (iv) any other action asserting a claim against us that is governed by the internal affairs doctrine (each, a "Covered Proceeding").

In addition, the Certificate of Incorporation states that this exclusive forum provision does not apply to actions in which the Court of Chancery concludes that an indispensable party is not subject to the jurisdiction of the Delaware courts and can be subject to the jurisdiction of another court within the U.S.

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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