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Surgery Partners Inc. (SGRY)
:SGRY
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Surgery Partners (SGRY) AI Stock Analysis

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SGRY

Surgery Partners

(NASDAQ:SGRY)

Rating:62Neutral
Price Target:
$23.50
▲(10.54%Upside)
Surgery Partners demonstrates strong revenue growth and operational expansion, but profitability concerns due to high leverage and negative net margins weigh heavily. Positive earnings call highlights and strategic decisions offer some optimism but are offset by technical weaknesses and valuation concerns.
Positive Factors
Financial Performance
SGRY reported 1Q revenue of $776m, which was in-line with consensus but 2% above the estimate.
Regulatory Changes
The elimination of the inpatient only (IPO) list and expanded site-of-service flexibility stands out as a positive development for ASC operators including SGRY.
Revenue Growth
More than 50% of Surgery Partners' net revenue comes from MSK procedures, which are expected to grow due to the CMS proposal.
Negative Factors
Debt Management
Interest expense will increase on the $1.4B term loan following expiration of a swap with capped expense of 2.2% for a 5% cap.
Interest Expense
The increased rate on the term loan poses a significant headwind to consider.

Surgery Partners (SGRY) vs. SPDR S&P 500 ETF (SPY)

Surgery Partners Business Overview & Revenue Model

Company DescriptionSurgery Partners, Inc., through its subsidiaries, owns and operates a network of surgical facilities and ancillary services in the United States. The company operates through two segments, Surgical Facility Services and Ancillary Services. Its surgical facilities comprise ambulatory surgery centers and surgical hospitals that offer non-emergency surgical procedures in various specialties, including gastroenterology, general surgery, ophthalmology, orthopedics, and pain management. The company's surgical hospitals also provide ancillary services, such as diagnostic imaging, pharmacy, laboratory, obstetrics, oncology, physical therapy, and wound care; and ancillary services, which consist of multi-specialty physician practices, urgent care facilities, and anesthesia services. As of December 31, 2021, it owned or operated a portfolio of 126 surgical facilities, including 108 ambulatory surgical centers and 18 surgical hospitals in 31 states. Surgery Partners, Inc. was founded in 2004 and is headquartered in Brentwood, Tennessee.
How the Company Makes MoneySurgery Partners generates revenue primarily by providing surgical services through its network of ambulatory surgery centers and hospitals. The company earns money by billing patients, insurance companies, and government programs like Medicare and Medicaid for the surgical procedures and related services it provides. Key revenue streams include facility fees for use of its surgical centers, professional fees for services rendered by affiliated physicians, and ancillary services such as diagnostic imaging and laboratory testing. Additionally, Surgery Partners may engage in strategic partnerships and joint ventures with physicians and healthcare organizations to expand its service offerings and increase its market presence.

Surgery Partners Earnings Call Summary

Earnings Call Date:May 12, 2025
(Q1-2025)
|
% Change Since: -4.06%|
Next Earnings Date:Aug 05, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong revenue and case growth, successful physician recruitment, and a robust M&A pipeline, indicating a positive business trajectory. However, slight margin pressure, increased interest expenses, and first-quarter cash flow challenges were noted as concerns.
Q1-2025 Updates
Positive Updates
Strong Revenue and EBITDA Growth
Surgery Partners reported first quarter net revenue of $776 million and adjusted EBITDA of $103.9 million, both in line with expectations. Adjusted EBITDA grew nearly 7% and net revenue grew 8% compared to the prior year's first quarter.
Significant Surgical Case Growth
The company performed over 160,000 surgical cases in the first quarter, a 4.5% increase from 2024. Notably, orthopedic cases grew 3.4%, with total joint procedures increasing by 22%.
Successful Physician Recruitment
Nearly 150 new physicians were added in the first quarter, expected to bring higher overall acuity cases compared to prior cohorts. Revenue per physician from this cohort is up 14% compared to 2024.
Robust M&A Activity
To date in 2025, Surgery Partners deployed $55 million and added 5 surgical facilities at an effective multiple under 8x adjusted EBITDA. The M&A pipeline remains robust.
De Novo Facility Expansion
The company opened 8 de novo facilities in 2024 and currently has 10 under construction, focusing on higher acuity specialties like orthopedics.
Negative Updates
Slight Margin Pressure
The company experienced slight margin pressure primarily due to a mix of business that is expected to improve throughout the year.
Interest Rate Exposure
The expiration of an interest rate swap at the end of the first quarter introduces a headwind from higher interest costs, with the new interest rate cap at 5% compared to the previous 2.2%.
First Quarter Cash Flow Challenges
Operating cash flows were lower in the first quarter, primarily due to seasonal patterns and timing of working capital activities, including higher distributions to physician partners.
Company Guidance
In the first quarter of 2025, Surgery Partners reported net revenue of $776 million and adjusted EBITDA of $103.9 million, marking growth of 8% and nearly 7%, respectively, compared to the previous year. The company's growth was driven by a 6.5% increase in surgical case volume, although offset by a 1% decline in rates, primarily due to growth in lower acuity specialties. Same-facility revenue growth was over 5%, with expectations for full-year growth to reach or exceed 6%. Surgery Partners completed over 160,000 surgical cases, with a notable 22% growth in total joint procedures within orthopedics. The company also focused on expanding its capabilities, adding 150 new physicians and investing in 68 surgical robots. For M&A, $55 million was deployed to add five surgical facilities, and 10 de novo facilities are under construction. The company's liquidity stood at over $615 million, supporting its 2025 guidance of $3.3 to $3.45 billion in revenue and $555 to $565 million in adjusted EBITDA.

Surgery Partners Financial Statement Overview

Summary
Surgery Partners exhibits strong revenue growth but faces challenges with profitability due to high operating expenses and interest costs. The balance sheet shows significant leverage, which poses risks, although cash flow generation is strong, providing some stability.
Income Statement
65
Positive
Surgery Partners has shown consistent revenue growth, with a TTM (Trailing-Twelve-Months) revenue of $3.17 billion, up from $2.54 billion in 2022. However, the company has been struggling with profitability, as evidenced by negative net income margins over the years. The gross profit margin is healthy at approximately 22.6% for TTM, but the net profit margin remains negative due to high operating expenses and interest costs.
Balance Sheet
55
Neutral
The company's balance sheet shows a high debt-to-equity ratio of 2.22, indicating significant leverage. While the equity ratio is fairly stable at 21.9%, the high level of debt poses a potential risk. Return on equity is negative due to the company's net losses, which impacts the overall financial stability.
Cash Flow
70
Positive
Surgery Partners has demonstrated strong operating cash flow, with a TTM figure of $265.4 million. The free cash flow to net income ratio is positive, indicating effective cash management despite net losses. However, free cash flow growth has been inconsistent, reflecting fluctuating capital expenditures and financing activities.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue3.11B2.74B2.54B2.23B1.86B
Gross Profit745.60M647.50M574.90M491.40M379.80M
EBITDA501.40M446.10M460.00M401.00M277.80M
Net Income-168.10M-11.90M-54.60M-70.90M-116.10M
Balance Sheet
Total Assets7.89B6.88B6.68B6.12B5.41B
Cash, Cash Equivalents and Short-Term Investments269.50M195.90M282.90M389.90M317.90M
Total Debt3.70B3.06B2.93B3.29B3.20B
Total Liabilities4.37B3.51B6.68B3.82B3.79B
Stockholders Equity1.79B1.99B2.00B1.09B550.10M
Cash Flow
Free Cash Flow209.70M205.00M78.20M29.50M204.00M
Operating Cash Flow300.10M293.80M158.80M87.10M246.90M
Investing Cash Flow-488.50M-225.60M-307.90M-331.70M-88.40M
Financing Cash Flow262.00M-155.20M42.10M316.30M66.70M

Surgery Partners Technical Analysis

Technical Analysis Sentiment
Negative
Last Price21.26
Price Trends
50DMA
22.42
Negative
100DMA
22.59
Negative
200DMA
23.80
Negative
Market Momentum
MACD
-0.08
Positive
RSI
39.15
Neutral
STOCH
21.92
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 21.26 is below the 20-day moving average (MA) of 22.16, below the 50-day MA of 22.42, and below the 200-day MA of 23.80, indicating a bearish trend. The MACD of -0.08 indicates Positive momentum. The RSI at 39.15 is Neutral, neither overbought nor oversold. The STOCH value of 21.92 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 (52)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
79
Outperform
$1.99B24.439.18%11.38%10.29%
76
Outperform
$1.12B31.015.00%54.81%-45.07%
71
Outperform
$3.21B36.207.85%5.34%
64
Neutral
$1.82B10.5210.38%2.23%-8.86%-36.22%
62
Neutral
$2.69B-10.43%13.54%-30732.00%
60
Neutral
$2.00B10.676.35%5.48%
52
Neutral
$7.61B0.11-63.03%2.07%16.35%0.29%
* Healthcare Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
SGRY
Surgery Partners
21.26
-9.85
-31.66%
ACHC
Acadia Healthcare
22.26
-43.27
-66.03%
ADUS
Addus Homecare
109.43
-13.24
-10.79%
AMED
Amedisys
97.94
-0.17
-0.17%
SEM
Select Medical
14.26
-6.62
-31.70%
ASTH
Astrana Health
23.27
-28.96
-55.45%

Surgery Partners Corporate Events

M&A TransactionsBusiness Operations and Strategy
Surgery Partners Decides to Remain Independent
Positive
Jun 17, 2025

On June 17, 2025, Surgery Partners, Inc. announced that its Special Committee of independent directors, after discussions with Bain Capital regarding a proposal to acquire all outstanding shares not owned by Bain, decided to continue as an independent publicly traded company. The decision reflects the Committee’s confidence in Surgery Partners’ long-term growth prospects and ability to enhance shareholder value through its established growth algorithm and business execution. The company reaffirmed its financial guidance for 2025 and plans to host an Investor Day in the second half of the year to discuss future growth plans and industry trends.

The most recent analyst rating on (SGRY) stock is a Buy with a $28.00 price target. To see the full list of analyst forecasts on Surgery Partners stock, see the SGRY Stock Forecast page.

Executive/Board ChangesShareholder Meetings
Surgery Partners Holds Annual Meeting, Re-elects Directors
Neutral
Jun 6, 2025

On June 6, 2025, Surgery Partners held its Annual Meeting, where stockholders voted on several key proposals. The election of Class I directors resulted in the re-election of current directors John A. Deane, Teresa DeLuca, M.D., and Wayne S. DeVeydt, who will serve until the 2028 annual meeting. Additionally, stockholders approved the executive compensation on an advisory basis, the 2025 Omnibus Incentive Plan, and ratified Ernst & Young LLP as the independent registered public accounting firm for the fiscal year 2025.

The most recent analyst rating on (SGRY) stock is a Buy with a $28.00 price target. To see the full list of analyst forecasts on Surgery Partners stock, see the SGRY Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Jul 23, 2025