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Surgery Partners Inc (SGRY)
NASDAQ:SGRY
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Surgery Partners
(NASDAQ:SGRY)
63Neutral
Positive Factors
Earnings
SGRY reported good Q4:24 results, with adjusted EPS of $0.44 beating consensus estimates by +22%.
Market Position
SGRY is largely shielded from the risks and pressures impacting other providers and is positioned to sustain double-digit Adj EBITDA growth.
Revenue
Revenue of $864.4 million was +4.4% above consensus estimates.
Negative Factors
Guidance
The company guided 2025 revenues in a range of $3.3-3.45 billion or 3% below consensus at the midpoint.
Operating Cash Flow
Operating cash flow in 2024 is slightly up year-over-year but lower than originally estimated due to increased transaction-related costs and other financial factors.
Private Offer
Bain’s offer to take SGRY private at $25.75 per share, a 26% premium to trading levels at the time, looks inadequate relative to other scaled asset transactions.
Surgery Partners (SGRY) vs. S&P 500 (SPY)
Market Cap
$3.06B
Dividend YieldN/A
Average Volume (3M)1.07M
Price to Earnings (P/E)―
Beta (1Y)1.60
Revenue Growth13.52%
EPS Growth-1296.44%
CountryUS
Employees15,000
SectorHealthcare
Sector Strength72
IndustryMedical - Care Facilities
Share Statistics
EPS (TTM)-1.33
Shares Outstanding127,613,090
10 Day Avg. Volume731,488
30 Day Avg. Volume1,067,270
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.99
Price to Cash Flow (P/CF)6.90
P/FCF Ratio17.90
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$32.67Price Target Upside36.41% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering10
Surgery Partners Business Overview & Revenue Model
Company DescriptionSurgery Partners, Inc. (SGRY) is a leading healthcare services company focused on providing high-quality surgical services across the United States. The company operates in the healthcare sector, specifically within the outpatient surgery and ancillary services market. Surgery Partners owns and operates a network of surgical facilities, including ambulatory surgery centers (ASCs) and surgical hospitals, offering a range of clinical services to patients. Their core services include outpatient surgeries, diagnostic services, and ancillary services such as anesthesia and pharmacy.
How the Company Makes MoneySurgery Partners generates revenue primarily through the provision of surgical and ancillary services across its network of facilities. The company's key revenue streams include payments from private health insurance companies, government health programs like Medicare and Medicaid, and direct payments from patients. Surgery Partners also benefits from strategic partnerships and affiliations with healthcare providers and physician groups, which help enhance its service offerings and patient referral networks. Additionally, the company may engage in joint ventures and acquisitions to expand its facility network and increase its market share, thereby driving revenue growth.
Surgery Partners Financial Statement Overview
Summary
Surgery Partners shows strong revenue growth and improved capital structure by eliminating debt. However, ongoing net losses and declining free cash flow growth highlight profitability challenges.Income Statement
Surgery Partners demonstrated robust revenue growth, with a TTM increase of 13.53% compared to the previous year. However, profitability metrics such as the net profit margin were negative at -5.4% due to a net loss. The EBIT margin improved slightly to 11.6%, indicating operational efficiency gains. The company faces challenges in profitability despite strong revenue growth.65
Positive
Balance Sheet
The company has improved its financial position by eliminating total debt in the TTM period, enhancing its equity ratio to 22.7%. This indicates a stronger capital structure and reduced financial risk. However, the return on equity is negative due to net losses, highlighting ongoing profitability challenges.70
Positive
Cash Flow
Operating cash flow was positive, but free cash flow growth declined by 52.07% in the TTM period. The free cash flow to net income ratio is favorable due to negative net income, suggesting operational resilience. However, the decline in free cash flow growth raises concerns about cash generation capabilities.60
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 3.11B | 2.74B | 2.54B | 2.23B | 1.86B | Gross Profit |
| 745.60M | 647.50M | 574.90M | 491.40M | 379.80M | EBIT |
| 348.80M | 328.00M | 345.20M | 302.20M | 246.60M | EBITDA |
| 501.40M | 446.10M | 460.00M | 401.00M | 277.80M | Net Income Common Stockholders |
| -168.10M | -11.90M | 87.00M | 70.70M | 1.30M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 269.50M | 195.90M | 282.90M | 389.90M | 317.90M | Total Assets |
| 7.89B | 6.88B | 6.68B | 6.12B | 5.41B | Total Debt |
| 393.50M | 3.06B | 2.93B | 3.29B | 3.20B | Net Debt |
| 124.00M | 2.87B | 2.65B | 2.90B | 2.88B | Total Liabilities |
| 4.25B | 3.51B | 6.68B | 6.12B | 5.41B | Stockholders Equity |
| 1.79B | 1.99B | 2.00B | 1.09B | 115.60M |
| Cash Flow | Free Cash Flow | |||
| 209.70M | 205.00M | 78.20M | 29.50M | 204.00M | Operating Cash Flow |
| 300.10M | 293.80M | 158.80M | 87.10M | 246.90M | Investing Cash Flow |
| -488.50M | -225.60M | -307.90M | -331.70M | -88.40M | Financing Cash Flow |
| 262.00M | -155.20M | 42.10M | 316.30M | 66.70M |
Surgery Partners Technical Analysis
Negative
23.95
Price Trends
24.20
Negative
23.63
Positive
26.42
Negative
Market Momentum
-0.05
Positive
45.89
Neutral
41.65
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SGRY, the sentiment is Negative. The current price of 23.95 is below the 20-day moving average (MA) of 24.01, below the 50-day MA of 24.20, and below the 200-day MA of 26.42, indicating a bearish trend. The MACD of -0.05 indicates Positive momentum. The RSI at 45.89 is Neutral, neither overbought nor oversold. The STOCH value of 41.65 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SGRY.
Surgery Partners Risk Analysis
Surgery Partners disclosed 41 risk factors in its most recent earnings report. Surgery Partners reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Surgery Partners Peers Comparison
Overall Rating
UnderperformOutperform
Sector (49)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $12.10B | 11.07 | 17.82% | 0.43% | 10.82% | 65.64% | |
72 Outperform | $84.24B | 15.55 | -230.22% | 0.77% | 8.67% | 15.32% | |
72 Outperform | $12.66B | 4.13 | 110.75% | ― | 0.57% | 440.71% | |
63 Neutral | $3.06B | ― | -8.90% | ― | 13.52% | -1296.44% | |
61 Neutral | $2.80B | 10.85 | 8.73% | ― | 7.69% | ― | |
52 Neutral | $379.06M | ― | 39.18% | ― | 1.16% | -278.41% | |
49 Neutral | $6.85B | 0.81 | -52.91% | 2.50% | 17.48% | 1.17% |
* Healthcare Sector Average
Performance Comparison
SGRY
Surgery Partners
23.95
-4.93
-17.07%
ACHC
Acadia Healthcare
30.12
-45.95
-60.40%
CYH
Community Health
2.70
-0.66
-19.64%
HCA
HCA Healthcare
342.16
14.68
4.48%
THC
Tenet Healthcare
133.14
28.75
27.54%
UHS
Universal Health
186.18
11.68
6.69%
Surgery Partners Earnings Call Summary
Earnings Call Date: Mar 3, 2025 | % Change Since: -0.54% | Next Earnings Date: May 6, 2025
Earnings Call Sentiment Positive
Surgery Partners demonstrated robust financial performance in 2024 with record revenue and EBITDA growth, driven by strong organic growth and strategic acquisitions. The company successfully managed contractual rates and expanded its physician base, positioning itself well for 2025. However, higher transaction costs impacted cash flow, and potential legislative changes pose a manageable risk. Overall, the highlights significantly outweigh the lowlights, underscoring a positive outlook.Highlights
Record Revenue and EBITDA
Surgery Partners reported full-year adjusted EBITDA growth of 16% and net revenue growth of 13.5%, with the company surpassing $3 billion in revenue and $0.5 billion in adjusted EBITDA for the first time.
Strong Organic and Orthopedic Growth
Same facility revenue grew by 8%, with significant contributions from orthopedic procedures, including a 50% increase in total joint procedures.
Successful Acquisitions and De Novo Growth
The company added seven surgical facilities and opened eight de novo facilities in 2024. The pipeline for 2025 includes 12 facilities in development, supporting long-term growth.
Managed Care and Contractual Rate Confidence
Surgery Partners secured over 99% of expected contractual rates for 2025, with Medicare rate increases of approximately 3%, providing visibility into 2025 rate growth.
Strong Physician Recruitment
The company recruited over 750 new physicians in 2024, enhancing its focus on high-acuity specialties, particularly orthopedics.
Lowlights
Transaction and Integration Costs Impacting Cash Flow
Transaction and integration costs were higher than typical in 2024 due to increased M&A activity, impacting cash flow and expected to normalize in 2025.
Potential Impact from Legislative Changes
While the company sees potential upside, there is a 1% revenue risk from site neutrality policies, which, if enacted, could affect the revenue mix.
Company Guidance
During the call, Surgery Partners provided guidance for 2025, projecting net revenue between $3.3 billion and $3.45 billion and adjusted EBITDA ranging from $555 million to $565 million, reflecting double-digit growth and margin expansion in line with their long-term growth algorithm. The company reported 2024 net revenue growth of 13.5% and adjusted EBITDA growth of 16%, with margin expansion of 30 basis points. They performed over 656,000 surgical cases in 2024, an 8.4% increase from 2023, with significant contributions from acquisitions and organic growth, including a 50% rise in total joint procedures. The 2024 acquisition activity involved deploying nearly $400 million, adding seven surgical facilities, primarily in higher acuity specialties like orthopedics and spine. For 2025, $200 million is expected to be deployed in acquisitions, with $53 million already spent on three ASCs in California and Texas at an average purchase price multiple of approximately 8x. Surgery Partners also addressed legislative impacts, estimating that potential site neutrality policies would affect less than 1% of their net revenue, emphasizing that their facilities are well-positioned to benefit from any procedural shifts to lower-cost sites.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.