$SGRY earnings report

Surgery Partners reported third quarter 2026 revenues of $815.3 million, a decline of (0.8)% from $821.5 million a year earlier. The company attributes the reported decline in part to the Idaho Falls divestiture, with results reflecting ownership of those facilities through September 13, 2026. On a same-facility basis, revenues rose 6.0%, driven by a 5.8% increase in revenue per case and a 0.2% increase in same-facility cases. Year-to-date reported revenues rose 2.1% to $2,475.1 million, and same-facility revenues rose 4.6%, with revenue per case up 4.2% and same-facility cases up 0.3%. The filing shows that the revenue growth came from price and mix per case rather than volume.

Profitability weakened in the quarter. Operating income was $85.6 million versus $105.7 million, and Adjusted EBITDA was $132.7 million versus $136.4 million, with the Adjusted EBITDA margin at 16.3% versus 16.6%. General and administrative expenses rose to $40.6 million from $22.4 million, and transaction and integration costs rose to $22.6 million from $12.6 million. The company's reconciliation attributes $14.1 million of those transaction costs to M&A costs and $8.5 million to other items. Lower interest expense, net of $(67.9) million versus $(74.9) million, supported pre-tax income, which was $17.7 million versus $30.8 million. Net loss attributable to Surgery Partners, Inc. was $(21.1) million versus $(22.7) million, so the loss narrowed slightly while remaining negative. Adjusted net income attributable to common stockholders was $21.2 million versus $16.5 million, and Adjusted diluted EPS was $0.16 versus $0.13, but these are non-GAAP measures and the filing does not reconcile the difference in the adjustments to a single cause.

Cash generation improved. Operating cash flow was $103.5 million versus $83.6 million in Q3 2026 and 2025 respectively, and $174.5 million versus $170.9 million year-to-date. Capital expenditures were $(24.5) million versus $(19.8) million. Cash and cash equivalents rose to $354.5 million from $239.9 million at December 31, 2025, and total assets fell to $7,049.8 million from $8,119.7 million, with long-term debt, less current maturities, reduced to $2,998.7 million from $3,602.9 million. The company reports total net debt to EBITDA of approximately 4.4x. Distributions to non-controlling interest holders were $(53.1) million in the quarter and $(156.6) million year-to-date.

The central corporate event is the amended merger agreement with HealthSpan Partners, which increases the consideration to $25.00 per share in cash, representing an enterprise value of up to approximately $6.0 billion, after the company received an unsolicited competing proposal from a third party. The Ticking Fee applies to stockholders other than affiliates of Bain Capital Private Equity if stockholder approval has been obtained but the merger has not occurred by March 1, 2027. The company expects closing in the first quarter of 2027. Because of the pending transaction, the company has stopped providing forward-looking guidance and will not hold an earnings call, so the outlook for 2026 and beyond is not quantified in this filing. The reader should weigh the operating trends above against the transaction's conditions and timing.

Second-quarter revenue increased 2.7% to $848.9 million, while same-facility revenue increased 5.0%. The same-facility result was driven primarily by a 4.8% increase in revenue per case, while same-facility cases increased 0.3%. Year-to-date revenue increased 3.6% to $1,659.8 million and year-to-date same-facility revenue increased 4.9%, supported by a 4.0% increase in revenue per case and a 0.8% increase in same-facility cases.

Profitability and cash generation were weaker against the prior-year comparisons provided. Adjusted EBITDA was $125.2 million, compared with $129.0 million for the same period in 2025, while year-to-date Adjusted EBITDA was $227.5 million compared with $232.9 million. The Company also reported a net loss attributable to Surgery Partners, Inc. of $15.0 million for the second quarter. The supplied filing text does not include the underlying income-statement table needed to assess reported operating income, gross margin, net-loss components, or per-share results.

Operating cash flow was $59.3 million for the quarter, compared with $81.3 million in the same period in 2025. Year-to-date operating cash flow was $71.0 million compared with $87.3 million in the prior-year period. Liquidity included $216.7 million of cash and cash equivalents and $617.8 million of revolving-credit-facility borrowing capacity as of June 30, 2026. The total net debt to EBITDA ratio under the credit agreement was approximately 4.4x at quarter-end.

Management reaffirmed full-year 2026 revenue guidance of $3.35 billion to $3.45 billion and Adjusted EBITDA of at least $530 million, excluding the impact of the pending Idaho Falls divestiture. The pending transaction is central to management's portfolio optimization and deleveraging commentary, but remains subject to closing conditions including physician members and governing board approvals. The principal operating items to follow are same-facility case growth, revenue per case, EBITDA performance, operating cash flow, and progress toward closing the Idaho Falls transaction.