Surgery Partners Inc. ((SGRY)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Surgery Partners Inc. recently held its earnings call, which painted a balanced picture of the company’s current financial health and future prospects. The call highlighted strong revenue and EBITDA growth, driven by robust organic growth in surgical cases and strategic expansion through new facilities and physician recruitment. However, challenges such as increased interest expenses, slower M&A activity, and potential regulatory impacts were also noted, creating a sentiment that reflects both optimism and caution.
Consistent Revenue and EBITDA Growth
Surgery Partners reported impressive financial metrics for Q2 2025, with net revenue reaching $826 million and adjusted EBITDA hitting $129 million. This marks an 8.5% year-over-year increase in net revenue and a 9% rise in adjusted EBITDA, underscoring the company’s solid financial performance.
Strong Organic Growth in Surgical Cases
The company achieved a notable increase in surgical cases, performing nearly 173,000 in Q2 2025, which represents a 3.8% rise from the previous year. This growth was supported by a 5% increase in same-facility revenue, driven by a 3.4% growth in surgical cases and a 1.6% rate increase.
Surge in Orthopedic Procedures
Orthopedic procedures, particularly total joint surgeries, saw a significant surge, with a 26% growth compared to the prior year. This highlights the company’s successful focus on higher acuity orthopedic surgeries, contributing to its overall growth.
Strong Physician Recruitment
In the first half of 2025, Surgery Partners recruited nearly 300 new physicians, with a particular emphasis on orthopedic specialists. This recruitment strategy is poised to enhance the company’s growth potential and expand its service offerings.
De Novo Expansion
The company continued its strategic expansion by opening eight new de novo facilities in 2024, with ten more under construction. These facilities are concentrated on higher acuity specialties like orthopedics, aligning with the company’s growth strategy.
Improved Cash Flow and Liquidity
Surgery Partners reported operating cash flows of $81 million in Q2 2025, with a total liquidity of $645 million. This financial stability provides a strong foundation for future investments and operational efficiency.
Increased Interest Expenses
The company faced increased interest expenses, with the effective interest rate on corporate debt rising to approximately 7.4% in Q2 2025. This resulted in $23 million higher interest payments compared to the previous year, posing a challenge to the company’s financial management.
Slower M&A Activity
M&A activity was slower than anticipated, with only $66 million deployed in acquisitions in the first half of 2025, falling short of the $200 million target for the year. This slowdown could impact the contribution from M&A to the full-year earnings.
Potential Impact of Regulatory Environment
While Surgery Partners does not foresee immediate adverse effects, potential changes in Medicaid and exchange-based reimbursement programs, along with CMS rate proposals, could present future challenges for the company.
Executive Chairman Transition
A significant leadership change was announced as Wayne DeVeydt, the Executive Chairman, will be departing to join United Health Group as CFO. This transition marks a pivotal moment for the company’s leadership structure.
Forward-Looking Guidance
Looking ahead, Surgery Partners maintains a positive outlook with plans to continue its growth trajectory. The company aims to achieve $200 million in acquisitions by year-end and remains focused on optimizing its portfolio and enhancing operational efficiency. With a leverage ratio of 4.1x and substantial liquidity, the company is well-positioned to pursue its strategic objectives.
In summary, the earnings call for Surgery Partners Inc. reflected a balanced sentiment, highlighting both the company’s strong growth in revenue and surgical cases, as well as challenges such as increased interest expenses and slower M&A activity. With strategic expansions and strong physician recruitment, the company is poised for continued growth, although potential regulatory impacts and leadership changes present areas to watch closely.