Surgery Partners 2025 Q1 Earnings Misses Targets with Net Income Down 101.2%

Surgery Partners (SGRY) reported its fiscal 2025 Q1 earnings on May 12th, 2025. The company missed analysts' expectations with a widened net loss, impacting its performance against forecasts. Despite reaffirming its full-year 2025 guidance, projecting revenues between $3.30 billion and $3.45 billion and Adjusted EBITDA between $555 million and $565 million, the results showed a significant decline in net income. The adjusted EBITDA was in line with expectations, but the net loss was disappointing, reflecting challenges in maintaining profitability amidst operational expansions.

Revenue
Surgery Partners reported a revenue increase of 8.2% year-over-year, totaling $776 million for Q1 2025, compared to $717.40 million in Q1 2024. The revenue growth was driven by its Surgical Facility Services segment, which contributed the entirety of the $776 million reported, showcasing a notable improvement in operational performance.

Earnings/Net Income
Surgery Partners experienced a deepening loss, reporting $0.30 per share in Q1 2025 compared to a $0.10 loss per share in Q1 2024. The net loss amounted to $37.7 million, a stark contrast to the $24.30 million net income in Q1 2024, indicating a negative trend in earnings performance.

Post-Earnings Price Action Review
Surgery Partners has seen significant returns with a strategy of purchasing shares after revenue increases, holding them for 30 days post-earnings reports. Over the past five years, this approach has yielded a return of 215%, outperforming the benchmark by 119.93%. Despite a maximum drawdown of -63.96% and a Sharpe ratio of 0.43, which suggests some risk and moderate returns, the compound annual growth rate (CAGR) stands at 25.96%, reflecting consistent returns. This strategy highlights the potential for substantial gains despite inherent risks, emphasizing the importance of strategic timing in share acquisition post-earnings announcements.

CEO Commentary
Eric Evans, Chief Executive Officer of Surgery Partners, expressed satisfaction with the company's robust start to 2025, aligning with long-term growth strategies. He highlighted the focus on enhancing portfolio performance, advancing a strong M&A pipeline, and improving operational efficiencies. Evans remains optimistic about surgical trends and regulatory conditions, positioning the company for industry-leading earnings growth.

Guidance
Surgery Partners reaffirmed its full-year 2025 guidance, projecting revenues between $3.30 billion and $3.45 billion and Adjusted EBITDA ranging from $555 million to $565 million. This guidance reflects expected margin expansion from operational improvements, integration of acquisitions, and contributions from new openings this year.

Additional News
Surgery Partners is actively pursuing its growth strategy through mergers and acquisitions (M&A). The company completed five surgical facility acquisitions in the first quarter, deploying $55 million to enhance its operations. It targets $200 million in M&A spending for the remainder of 2025, emphasizing expansion in higher-acuity specialties like orthopedics. The firm's leadership remains stable, with no significant C-level changes reported recently. There has been no announcement regarding dividends or stock buybacks, as the company focuses on reinvesting in its growth initiatives. Surgery Partners continues to expand its physician network, adding nearly 150 new recruits, enhancing service capabilities and driving revenue growth.