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Surgery Partners Inc (SGRY)
NASDAQ:SGRY
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Surgery Partners
(NASDAQ:SGRY)
Rating:60Neutral
Price Target:
$24.00
▲( 5.26% Upside)
Positive Factors
Operational Execution
Operational execution, RCM advancements, procurement initiatives, and synergies from prior acquisitions should help to further expand margins in FY25.
Revenue Growth
The company has shown strong same-store revenue growth, with a notable increase in case growth and strong performance across all service lines, particularly in gastroenterology and musculoskeletal services.
Negative Factors
Interest Expense
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.
Operating Cash Flow
Operating cash flow in the first quarter was just $6M compared to $41M a year ago, reflecting shifts in working capital.
Surgery Partners (SGRY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.90B
Dividend YieldN/A
Average Volume (3M)1.07M
Price to Earnings (P/E)―
Beta (1Y)1.35
Revenue Growth13.54%
EPS Growth-30732.00%
CountryUS
Employees15,000
SectorHealthcare
Sector Strength42
IndustryMedical - Care Facilities
Share Statistics
EPS (TTM)0.04
Shares Outstanding128,160,080
10 Day Avg. Volume1,294,676
30 Day Avg. Volume1,070,583
Financial Highlights & Ratios
PEG Ratio0.09
Price to Book (P/B)1.56
Price to Sales (P/S)0.00
P/FCF Ratio13.55
Enterprise Value/Market Cap2.17
Enterprise Value/Revenue0.53
Enterprise Value/Gross Profit8.81
Enterprise Value/Ebitda3.05
Forecast
1Y Price Target
$31.30Price Target Upside37.28% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering11
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 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 exhibits strong revenue growth and improved capital structure with no debt in the TTM period. However, ongoing net losses and declining free cash flow growth pose challenges. The company needs to address profitability issues to sustain its financial health in the long term.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 |
| 559.30M | 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 |
| 3.70B | 3.06B | 2.93B | 3.29B | 3.20B | Net Debt |
| 3.43B | 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
22.80
Price Trends
22.64
Positive
23.04
Negative
25.57
Negative
Market Momentum
0.18
Positive
50.55
Neutral
23.69
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 22.8 is below the 20-day moving average (MA) of 22.86, above the 50-day MA of 22.64, and below the 200-day MA of 25.57, indicating a neutral trend. The MACD of 0.18 indicates Positive momentum. The RSI at 50.55 is Neutral, neither overbought nor oversold. The STOCH value of 23.69 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 (53)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $2.05B | 25.19 | 9.18% | ― | 11.38% | 10.29% | |
76 Outperform | $1.21B | 33.49 | 5.00% | ― | 54.81% | -45.07% | |
71 Outperform | $3.07B | 34.62 | 7.85% | ― | 5.34% | ― | |
64 Neutral | $1.86B | 10.78 | 10.38% | 3.02% | -8.86% | -36.22% | |
60 Neutral | $2.12B | 11.27 | 6.35% | ― | 5.48% | ― | |
60 Neutral | $2.90B | ― | -10.43% | ― | 13.54% | -30732.00% | |
53 Neutral | $5.14B | 3.03 | -43.89% | 2.83% | 16.75% | -0.06% |
* Healthcare Sector Average
Performance Comparison
SGRY
Surgery Partners
22.80
-2.59
-10.20%
ACHC
Acadia Healthcare
22.53
-41.05
-64.56%
ADUS
Addus Homecare
112.16
0.55
0.49%
AMED
Amedisys
93.43
-2.80
-2.91%
SEM
Select Medical
14.39
-3.09
-17.68%
ASTH
Astrana Health
24.29
-15.68
-39.23%
Surgery Partners Earnings Call Summary
Earnings Call Date:May 12, 2025
(Q1-2025)
| % Change Since: 2.89%|
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.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.