Breaking Down Surgery Partners, Inc. (SGRY) Financial Health: Key Insights for Investors

You're looking at Surgery Partners, Inc. (SGRY) because the shift to ambulatory surgery centers (ASCs) is a clear, multi-year tailwind, but honestly, the near-term financials are a mixed bag you need to unpack. The company just revised its full-year 2025 guidance down in November, now projecting revenue between $3.275 billion and $3.30 billion, with Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization-a key measure of operating cash flow) expected in the $535 million to $540 million range, a dip from earlier forecasts due to softer volume and payor mix in Q4. Still, they delivered a Q3 revenue of $821.5 million and grew same-facility cases by 3.4% year-over-year, showing the core business is defintely executing, especially with joint surgeries up 16% in the quarter. But, that leverage ratio sits at about 4.2x net debt/EBITDA, which is high, so you need to understand how management plans to navigate that debt load against the backdrop of an analyst consensus price target of $28.89. Let's break down the real risks and opportunities behind these numbers.

Revenue Analysis

You need to know where the money is coming from, and for Surgery Partners, Inc. (SGRY), the answer is clear: high-growth, short-stay surgical procedures. The company's revenue is fundamentally driven by its portfolio of over 200 surgical facilities, which include both ambulatory surgery centers (ASCs) and surgical hospitals, specializing in higher-acuity, outpatient care. This model is defintely capitalizing on the industry shift away from traditional inpatient settings.

For the full 2025 fiscal year, Surgery Partners, Inc. expects to bring in revenue between $3.275 billion and $3.30 billion, based on the most recent guidance revision in November 2025. This is a powerful number, but it's the underlying growth that tells the real story.

Here's the quick math on the near-term trend:

• Year-to-date (YTD) revenue through Q3 2025 hit $2.4237 billion.
• This represents a year-over-year (YoY) revenue increase of 7.7% for the first nine months of 2025.
• Same-facility revenue growth-which is the pure organic growth from existing centers-was a strong 5.4% YTD 2025.

Primary Revenue Streams and Segment Contribution

The core of Surgery Partners, Inc.'s revenue comes from providing surgical services. The company's portfolio is its main asset, and the growth is heavily weighted toward procedures that can be safely and efficiently moved into an outpatient setting, which is cheaper for payers (insurance companies) and often more convenient for patients. Orthopedic procedures are the standout here.

The continued strength in orthopedic procedures is explicitly cited by management as underpinning the company's topline growth, reinforcing their leading position in that segment. This focus on high-demand specialties like orthopedics and spine surgery is a key strategic lever for revenue per case, which increased 1.1% YTD 2025.

While the company doesn't break out a clean percentage split between its surgical hospitals and ambulatory surgery centers (ASCs) in its top-line reporting, the business model is centered on the ASC segment. The ASC model drives higher operating margins and is the primary growth engine. You should view the entire revenue base as a service-based stream, with the two facility types contributing to the overall case volume.

To be fair, the company's growth is a combination of organic growth (same-facility cases up 4.3% YTD 2025) and revenue from new acquisitions and de novo (newly opened) facilities.

Analysis of Revenue Stream Changes

A significant change to note is the recent revision of the 2025 full-year guidance. The initial revenue outlook was a wider range of $3.30 billion to $3.45 billion. The November 2025 update narrowed and slightly lowered the top end to $3.275 billion to $3.30 billion. This is a crucial detail.

What this estimate hides is the impact of near-term headwinds. Management pointed to two main factors for the revision: softer-than-anticipated volume and payor mix trends in Q3, plus a delayed cadence of capital deployment activities (meaning M&A and new facility openings were slower than planned). This signals that while the long-term growth algorithm remains strong, the execution on M&A and the immediate operating environment saw some friction.

The table below summarizes the key financial metrics driving the revenue picture:

For a deeper dive into the company's strategic priorities that support this revenue growth, you can review the Mission Statement, Vision, & Core Values of Surgery Partners, Inc. (SGRY).

Profitability Metrics

You're looking for a clear picture of how much money Surgery Partners, Inc. (SGRY) actually keeps, and the simple answer is that while their core business is highly efficient, the company is still navigating its way to consistent GAAP net profitability. We need to look beyond the net income line to understand their true operational strength.

For the full year 2025, Surgery Partners, Inc. projects revenue to be in the range of $3.275 billion to $3.30 billion, with Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization-a key measure of operating cash flow for capital-intensive healthcare companies) expected between $535 million and $540 million.

Gross, Operating, and Net Margins: A 2025 Snapshot

Since Surgery Partners, Inc. is a service-based business, the most telling profitability metrics are the operating and net margins. Here's a quick look at the 2025 year-to-date (YTD) figures and their most recent quarterly performance:

• Gross Profit Margin: The gross margin for a healthcare services company like SGRY is essentially the revenue minus the cost of services (like clinical labor and supplies). While the exact GAAP figure for YTD 2025 isn't explicitly detailed, the operational efficiency is better captured by the next metric.
• Operating Profit Margin: The reported Operating Margin for the second quarter of 2025 stood at an impressive 13.5%. This shows strong control over administrative and general expenses relative to revenue.
• Net Profit Margin: The company continues to report a Net Loss (GAAP) due to significant interest expense and non-cash charges. In Q3 2025, the Net Loss Attributable to Surgery Partners, Inc. was $22.7 million on $821.5 million in revenue, translating to a Net Loss Margin of approximately -2.76%.

The negative net margin is the main risk here, driven largely by their debt load. What this estimate hides is the high cost of capital, which is a structural challenge for a growth-by-acquisition model.

Profitability Trends and Operational Efficiency

The trend in 2025 shows a clear path of improving operational performance, even as the GAAP net loss fluctuates. The YTD Adjusted EBITDA margin through Q3 2025 was 15.2%, demonstrating consistent cash generation from their facilities. This metric is what really matters for servicing their debt and funding growth, and it's holding up well.

Operational efficiency is a bright spot. Same-facility revenue grew 6.3% in Q3 2025, driven by a 3.4% increase in same-facility cases. This means they are getting more utilization out of their existing Ambulatory Surgery Centers (ASCs), plus they are seeing a 2.8% increase in revenue per case. That's a powerful combination of volume and rate growth.

• Net Loss Trend (Q1 to Q3 2025): The quarterly net loss has narrowed significantly from $37.7 million in Q1 2025 to $2.5 million in Q2 2025, before widening slightly to $22.7 million in Q3 2025. This volatility suggests that, while the long-term trend is toward profitability, the near-term is still subject to non-recurring items and interest expense.
• Cost Management: The sustained Adjusted EBITDA margin of 16.6% in Q3 2025 shows effective cost management, especially considering the inflationary pressures on labor and supplies across the healthcare sector this year.

Industry Comparison: A Clear Advantage

When you compare Surgery Partners, Inc.'s operational profitability to the broader hospital sector, the advantage of the Ambulatory Surgery Center (ASC) model becomes clear. The median operating margin for U.S. hospitals in January 2025 was around 4.4% (including health system allocations) or 8% (excluding allocations). SGRY's Q2 2025 Operating Margin of 13.5% is substantially higher than the general hospital average.

This outperformance is defintely a structural advantage of the ASC model, which focuses on high-margin elective procedures and avoids the high fixed costs of emergency and inpatient care. This is a key reason why the ASC market is projected to reach $105.4 Billion in 2025. For a deeper look at the strategic direction underpinning these numbers, you should review the company's Mission Statement, Vision, & Core Values of Surgery Partners, Inc. (SGRY).

The action here is to keep a close eye on the Net Loss trend and the company's debt-to-EBITDA ratio, which stood at approximately 4.2x net debt/EBITDA as of September 30, 2025. That debt level is the primary governor on their GAAP net income, but the strong operational margins suggest they can handle it, provided the growth continues.

Debt vs. Equity Structure

You're looking at Surgery Partners, Inc. (SGRY) and the first thing to understand is that their growth engine runs heavily on debt, which is common in a capital-intensive sector like healthcare services. This model allows for rapid expansion-buying and building Ambulatory Surgery Centers (ASCs)-but it also means higher financial risk.

As of the third quarter of 2025, Surgery Partners, Inc. carries a substantial debt load. Their long-term debt, less current maturities, stood at approximately $3,460.6 million, with short-term debt (current maturities of long-term debt) being a relatively small portion at $103.0 million.

The key metric here is leverage (how much debt a company uses to finance assets). For Surgery Partners, Inc., the net debt-to-Adjusted EBITDA ratio was approximately 4.2x at the end of Q3 2025. This figure is critical because it's generally considered high risk in the healthcare services sector when it climbs above 4x. Honestly, that's a number that demands attention.

Here's the quick math on the capital structure as of September 2025:

• Net Debt-to-EBITDA: 4.2x (High for the sector)
• Debt-to-Equity Ratio: Approximately 75.1%

A Debt-to-Equity ratio of 75.1% means the company is using 75 cents of debt for every dollar of equity capital. While this is a significant reduction from the 172.9% ratio they carried five years ago, it still indicates a reliance on borrowing to fund their strategic acquisitions and capital expenditures.

To be fair, the company has been proactive in managing its debt maturity schedule. In 2024 and 2025, they executed several key financing moves to push out the due dates and lower the effective interest rate, which helps stabilize the near-term outlook. They completed a repricing of their term loan and revolving credit facility in 2025, reducing the interest rate to the Secured Overnight Financing Rate (SOFR) plus 250 basis points.

Plus, they priced an $800 million offering of 7.250% senior unsecured notes due 2032 in March 2024. This was a smart move to redeem existing notes, including those due in July 2025, effectively pushing out maturities. The 2025 Refinancing Term Loans, which total about $1,383 million, now mature on December 19, 2030. The goal is clear: use debt to fuel M&A, but manage the maturity wall so they can focus on operations, not refinancing. They've successfully pushed a significant portion of their corporate debt-about $2.2 billion-so that it has no maturities until 2030.

The balance is a tightrope walk: debt financing provides the capital for their aggressive M&A strategy, which includes adding new facilities and recruiting hundreds of physicians, but the high leverage ratio means higher cash interest payments, which management cited as a driver for reduced year-to-date operating cash flow in Q3 2025. This is the core trade-off for investors to weigh. You can read more about their operational momentum in the full post: Breaking Down Surgery Partners, Inc. (SGRY) Financial Health: Key Insights for Investors.

Liquidity and Solvency

You need to know if Surgery Partners, Inc. (SGRY) has enough short-term cash to cover its bills, especially with its aggressive growth strategy. The quick answer is yes, the immediate liquidity is solid, but you defintely need to watch the underlying cash flow trends and the company's significant debt load. The business model is sound, but the high-interest-rate environment is a headwind.

Assessing Surgery Partners, Inc. (SGRY)'s Liquidity Position

When I look at a company like Surgery Partners, I start with the current and quick ratios-the most direct measure of short-term financial health. For SGRY, these ratios, based on recent data, point to a healthy immediate liquidity position, which is critical for a high-growth healthcare provider.

• Current Ratio: At approximately 1.93, this means SGRY has nearly two dollars in current assets (cash, receivables, etc.) for every one dollar of current liabilities.
• Quick Ratio: At about 1.78, this is also strong. The quick ratio, or acid-test ratio, strips out inventory-which is less liquid-and still shows a comfortable buffer.

A ratio above 1.0 is generally good, and SGRY's numbers are well above that threshold. This suggests the company can meet its near-term obligations without stress. Here's the quick math on their short-term strength:

Cash Flow and Working Capital Trends

The cash flow statement tells the real story of how the business is generating and using its capital. For the third quarter of 2025, Surgery Partners reported a solid Cash Flow from Operating Activities (OCF) of $83.6 million, a noticeable jump from the prior year's quarter.

But, look closer at the year-to-date (YTD) figures: OCF for YTD 2025 was $170.9 million, which is actually down compared to the prior year period. Management noted this dip was largely due to two factors: higher cash interest payments-a direct consequence of the macroeconomic rate environment-and the timing of routine transactions involving working capital. This is a classic working capital trend for a growing services business; as revenue grows (YTD revenue was $2,423.7 million), you often see a temporary working capital drag as you pay suppliers faster or wait longer for insurance and patient payments to come in. The key is that the Q3 OCF growth suggests the working capital timing issues may be normalizing.

Near-Term Risks and Actionable Strengths

SGRY's liquidity strength is its total available liquidity of over $600 million, which includes a significant cash balance and available revolver capacity. Plus, the company has no major corporate debt maturities until 2030, giving them a long runway to execute their growth plan. That's a huge advantage.

Still, the primary risk is solvency, not liquidity, due to the high leverage. The Net Debt-to-EBITDA ratio is elevated, sitting near 4.2x under the credit agreement, and 4.6x on a balance sheet basis. This is high. The YTD OCF decline, even if partly due to working capital, highlights that a larger portion of operating cash is being consumed by interest payments. This is why management cited softer-than-expected volume and payor mix as a potential pressure on near-term liquidity and discretionary M&A. Investors should monitor OCF growth closely in Q4 2025 and 2026. For a deeper dive into the ownership structure and institutional conviction, you should be Exploring Surgery Partners, Inc. (SGRY) Investor Profile: Who's Buying and Why?

Valuation Analysis

You're looking at Surgery Partners, Inc. (SGRY) after a tough year for the stock, wondering if the recent drop makes it a bargain or a warning sign. The direct takeaway is that while the stock trades at a discount on a price-to-book basis, its negative trailing earnings and elevated Enterprise Value-to-EBITDA (EV/EBITDA) suggest the market is pricing in significant future growth that is not yet reflected in current profitability.

The stock's performance has been a headwind. Over the last 12 months leading up to November 2025, Surgery Partners, Inc.'s stock price has decreased by 33.27%. The recent closing price around $15.30 sits near its 52-week low of $14.94, far below the 52-week high of $26.16. This volatility, reflected in a beta of 1.91, means the stock swings much harder than the overall market. It's defintely not a sleepy stock.

When we look at the core valuation multiples, the picture is mixed. Since the company reported a negative Earnings Per Share (EPS) of $-1.360 for the trailing twelve months (TTM) ended September 2025, the traditional Price-to-Earnings (P/E) ratio is 'At Loss' or not applicable. This is common for growth companies still ramping up profitability, but it means you must rely on other metrics.

• Price-to-Earnings (P/E) TTM: At Loss (EPS of $-1.360)
• Forward P/E: 25.47 (Based on 2025 fiscal year estimates)
• Price-to-Book (P/B): 1.16

Here's the quick math on the Enterprise Value multiple: the TTM EV/EBITDA is approximately 13.49 (based on an Enterprise Value of $7,507 million and TTM EBITDA of $556 million as of September 2025). This is higher than the industry median of 11.81, suggesting the company is valued at a premium relative to its peers' operating cash flow. The market is betting heavily on the company's ability to convert its strong revenue growth-full-year 2025 revenue guidance is between $3.275 billion and $3.3 billion-into bottom-line profit.

Surgery Partners, Inc. does not pay a dividend, so the dividend yield and payout ratios are both 0.00%. This is a growth-focused business, meaning all available cash is typically reinvested in new surgical facilities and physician recruitment, not returned to shareholders as income.

The analyst community views the stock as a 'Moderate Buy' or 'Outperform.' The average 12-month price target is approximately $28.80 to $31.14, implying a significant upside from the current price. This consensus reflects optimism about the company's strategy of shifting surgeries to lower-cost ambulatory surgery centers (ASCs) and its robust growth in total joint surgeries, which grew 23% year-to-date through Q3 2025. You can dive deeper into the institutional interest by Exploring Surgery Partners, Inc. (SGRY) Investor Profile: Who's Buying and Why?

What this estimate hides is the execution risk. The company recently revised its 2025 Adjusted EBITDA guidance down slightly, now expecting between $535 million and $540 million, due to delayed capital investments and lost earnings from three ASC divestitures. The valuation hinges on them hitting those revised targets and accelerating profitability in 2026.

The bottom line: Surgery Partners, Inc. is undervalued on a book-value basis but looks expensive on an EV/EBITDA basis, which is a classic signal of a growth stock with high debt and a strong operational story. The stock is a bet on management's ability to deliver on its adjusted EBITDA guidance and transition to positive GAAP earnings quickly.

Risk Factors

You're looking at Surgery Partners, Inc. (SGRY) because of its strong growth in the short-stay surgical market, but you have to be a realist about the risks before committing capital. The core issue for SGRY is a persistent net loss and a heavy debt load, which makes any operational hiccup a bigger problem than it would be for a cash-rich competitor.

The company continues to post a net loss, which hit $22.7 million in the third quarter of 2025, even with revenue growing. This lack of bottom-line profitability means the business is defintely sensitive to market shifts. Here's the quick math on the major headwinds the company faces right now.

Financial and Operational Headwinds

The most immediate concern is the company's high leverage. As of September 30, 2025, the net debt-to-EBITDA ratio stood at approximately 4.2x under the credit agreement, or 4.6x on a consolidated debt-to-Adjusted EBITDA basis. With around $2.2 billion in outstanding corporate debt, this leverage ratio is aggressive, even though there are no major maturities until 2030.

Also, the cost of servicing that debt is rising. The company has an elevated risk from rising interest expenses due to expiring fixed-rate swaps and exposure to floating rates, which directly eats into cash flow. This is why year-to-date operating cash flow was down to $170.9 million from $188.7 million in the prior year, largely driven by higher cash interest payments.

• High Debt: $2.2 billion outstanding corporate debt.
• Leverage: Net debt/EBITDA is approximately 4.2x.
• Rising Interest: Exposure to floating rates increases cash flow risk.

Market and Strategic Risks

Management revised its full-year 2025 guidance in November, which is a clear signal of near-term challenges. They now expect full-year revenue between $3.275 billion and $3.30 billion, down from the earlier range of $3.30 billion to $3.45 billion. This revision stems from two key market factors:

First, they saw softer-than-expected same-facility volume growth. Second, the payer mix shifted unfavorably, meaning a higher proportion of revenue came from lower-reimbursing government payers instead of commercial payers. This mix shift directly impacts the margin on every procedure, even as case volume grows.

Another strategic risk is execution on growth. Management noted a delayed cadence of capital deployment activities and slower earnings ramp from delays in new facility construction (de novo) and regulatory approvals. If they can't deploy their capital efficiently, the growth algorithm slows down. This is the kind of execution risk that can derail even a strong business model.

External and Regulatory Threats

The healthcare sector is a moving target, and regulatory changes are a constant threat. For example, the One Big Beautiful Bill Act (OBBBA), passed in July 2025, introduced changes to federally funded healthcare programs that could negatively impact SGRY's financials. The industry is highly competitive, too, and SGRY must constantly defend its market share against both large hospital systems and smaller, specialized ambulatory surgery centers (ASCs).

To mitigate these risks, Surgery Partners is focusing on operational excellence and disciplined capital deployment. They are actively evaluating portfolio optimization opportunities to expedite leverage reduction and accelerate cash flow generation. The company is also doubling down on its strength in high-acuity procedures, like orthopedics, and has successfully recruited over 500 new physicians year-to-date to drive higher-margin case volume. You can read more about who is betting on this strategy in Exploring Surgery Partners, Inc. (SGRY) Investor Profile: Who's Buying and Why?

Growth Opportunities

You are looking at Surgery Partners, Inc. (SGRY) and wondering where the real growth comes from, especially after their recent guidance revision. The core takeaway is this: despite near-term softness in commercial volume that led to a slightly lower 2025 outlook, the company's long-term growth algorithm remains intact, driven by the structural shift to outpatient care.

The company now expects full-year 2025 revenue in the range of $3.275 billion to $3.3 billion, with Adjusted EBITDA projected between $535 million and $540 million. This is a prudent adjustment, but the underlying operational momentum is strong. Same-facility revenue growth is still expected to align with their long-term target of 4% to 6%. That's a solid, predictable base to build on.

Here's the quick math on their growth drivers, which are less about massive new markets and more about deepening their specialization in high-value procedures:

• Product Innovations: They invested in 74 surgical robots through the third quarter of 2025, which supports higher-acuity, more complex procedures.
• Specialty Focus: Growth in total joint surgeries in their ambulatory surgical centers (ASCs) was robust, jumping 23% on a year-to-date basis through Q3 2025.
• Physician Recruitment: Over 500 new physicians were recruited through Q3 2025, a crucial factor since they are the engine of surgical volume.

The company's competitive advantage is its integrated outpatient surgical model (ASC-focused). This model is defintely favored by payors and patients alike because it's more cost-effective and convenient than traditional hospital settings. This structural tailwind is their biggest asset, and they are actively capitalizing on it.

Strategic Initiatives and Expansions

Surgery Partners, Inc. uses a three-pronged approach for expansion: acquisitions, de novo (new facility) development, and portfolio optimization. They deployed $71 million year-to-date in 2025 for acquisitions, and the near-term pipeline is robust, with over $300 million in opportunities under active evaluation. Plus, they have 10 de novo facilities currently under construction, which, while slower to ramp up, offer a fraction of the acquisition multiple and are heavily weighted toward high-acuity specialties like orthopedics.

They are also performing a strategic portfolio review, which means divesting or partnering on larger, less core surgical hospitals to reduce debt and free up cash flow for their high-growth ASC model. This is smart capital allocation-selling lower-margin, capital-intensive assets to fund higher-return growth. That's how you streamline a business for the next decade.

To see how these growth drivers translate into financial performance, here are the key 2025 projections:

The path isn't without bumps-high leverage and net losses are still a challenge-but the company is positioned to ride the powerful shift of surgical procedures out of the hospital and into the ASC setting. For a deeper dive into the valuation and risk profile, you can read the full analysis at Breaking Down Surgery Partners, Inc. (SGRY) Financial Health: Key Insights for Investors.