Surgery Partners 2025 Q3 Earnings 295.3% Net Income Surge Amid Revised Guidance

Surgery Partners (SGRY) reported Q3 2025 earnings with a 6.6% revenue increase to $821.5 million but missed adjusted EPS estimates. The company revised full-year guidance downward due to softer volume trends and delayed capital deployments, despite narrowing losses and a significant net income jump.

Revenue

Surgery Partners’ total revenue rose 6.6% year-over-year to $821.5 million, exceeding 2024 Q3’s $770.4 million. While revenue aligned with expectations, the company attributed growth to orthopedic procedure strength and operational efficiency.

Earnings/Net Income

The company narrowed losses to $0.18 per share in Q3 2025, a 28% improvement from $0.25 in Q3 2024. Net income surged 295.3% to $25.3 million, up from $6.4 million in the prior year, reflecting improved profitability. The EPS miss and revised guidance, however, signaled near-term challenges.

Post-Earnings Price Action Review

The strategy of buying Surgery Partners shares on the date of its earnings announcement and holding for 30 days showed favorable historical performance. Initial gains included a 6.25% return on the first day and a 14.2% increase in the first month, with a cumulative 21.4% return over three months. This suggests short-term momentum post-earnings, though recent price declines highlight market skepticism.

CEO Commentary

CEO Eric Evans emphasized “solid execution” with 6.6% revenue and 6.1% Adjusted EBITDA growth, crediting orthopedic procedure strength and operational discipline. He reiterated a focus on M&A opportunities, portfolio optimization, and disciplined capital deployment, while acknowledging near-term headwinds in payor mix and volume trends.

Guidance

Surgery Partners revised full-year 2025 revenue guidance to $3.275–$3.3 billion, down from $3.38 billion, and adjusted EBITDA to $535–$540 million. CFO Dave Doherty cited softer-than-expected volume and delayed capital investments as key factors, while expressing confidence in long-term value creation.

Post-Earnings Price Action Review

The 30-day holding strategy post-earnings historically yielded positive returns, with a 6.25% gain on the first day and a 14.2% increase in the first month. Although returns slightly declined by the third month, the cumulative 21.4% gain underscores the stock’s short-term responsiveness to earnings events. However, recent price declines—falling 26.11% in the week post-announcement—reflect investor caution over revised guidance and near-term challenges.

Additional News

1. M&A Pipeline: Surgery Partners announced a robust M&A pipeline, with over $300 million in opportunities under evaluation, including divestitures of three ASCs for $50 million and $71 million in capital deployed for acquisitions year-to-date.

2. Operational Focus: CEO Eric Evans emphasized strategic portfolio optimization, including divesting larger surgical hospitals to accelerate leverage reduction and cash flow generation.

3. Capital Deployment Delays: The company cited delayed capital investments and lost earnings from ASC divestitures as reasons for revised 2025 guidance, highlighting ongoing challenges in scaling growth initiatives.

Earnings/Net Income

The company’s net income surged 295.3% year-over-year, driven by improved operational efficiency and orthopedic procedure growth. Despite this, the adjusted EPS miss and revised guidance underscored near-term profitability pressures.

Guidance

Surgery Partners’ revised full-year revenue guidance of $3.275–$3.3 billion reflects a 2.6% reduction from prior estimates, while adjusted EBITDA guidance of $535–$540 million fell below analyst expectations. CFO Dave Doherty emphasized confidence in long-term resilience but acknowledged the need for cautious fourth-quarter planning.

Additional News

Surgery Partners’ CEO highlighted a strategic focus on M&A and portfolio optimization, with over $300 million in potential deals under review. The company also announced $71 million in capital deployed for acquisitions and $50 million from ASC divestitures, signaling a balanced approach to growth and liquidity.

Post-Earnings Price Action Review

The stock’s 26.11% weekly decline post-earnings contrasts with the historical 21.4% three-month cumulative gain from past earnings events. This divergence suggests market skepticism over revised guidance, despite the company’s long-term strategic strengths in orthopedic procedures and operational discipline.

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