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- **Revenue Growth**: Q3 revenue up 6.6% to $821.5M, driven by 16% YoY growth in total joint surgeries.
- **Strategic Challenges**: 20% EBITDA reduction due to delayed M&A ($71M vs. $250M target) and softer commercial payer mix.
- **Portfolio Optimization**: Evaluating divestitures of larger surgical hospitals to reduce leverage and improve cash flow conversion.
- **De Novo Risks**: Regulatory delays push breakeven timelines, but long-term accretive potential remains.

**【CEO Summary Section】**
- **Revenue Growth**: Q3 net revenue of $821.5 million (+6.6% YoY), adjusted EBITDA of $136.4 million (+6.1% YoY), and same-facility revenue growth of 6.3%.
- **Organic Growth**: 166,000 surgical cases, with 16% YoY growth in total joint surgeries. Robotics investment (74 surgical robots) and 500+ new physician recruits drive high-acuity demand.
- **Challenges**: Modest payer mix shift (commercial -160bps, Medicare +120bps) and softer-than-expected volume growth, prompting Q4 outlook revision.
- **Capital Deployment**: $71M in M&A, $45M from 3 ASC divestitures, and 9 de novo facilities under construction. Full year guidance revised to $3.275B-$3.3B revenue and $535M-$540M EBITDA.
- **Portfolio Optimization**: Evaluating strategic divestitures of larger surgical hospitals to reduce leverage and improve cash flow conversion.

**【CFO Financial Commentary】**
- **Financial Health**: Cash balance of $203.4M, operating cash flow of $83.6M, and net leverage of 4.2x. Repriced debt reduces interest rates to SOFR +250bps.
- **Expense Management**: Salaries (29.6% of revenue), supply costs (25.4%), and G&A (2.7%) reflect cost discipline. Procurement initiatives offset inflationary pressures.
- **Guidance Adjustment**: Full year EBITDA reduced by ~$20M due to delayed M&A ($71M deployed vs. $250M target), divestiture earnings loss, and cautious Q4 volume outlook.
- **De Novo Challenges**: Regulatory and construction delays delay breakeven for new facilities, but long-term accretive potential remains.

**【Q&A Highlights】**
- **Demand Weakness**: Broader-based commercial payer mix softness, not tied to specific procedures or geographies. Q4 growth expected but below internal targets.
- **M&A Timing**: Pipeline remains robust ($>300M opportunities), but 2025 deployment slower than planned. 60% of EBITDA reduction attributed to M&A timing.
- **Portfolio Strategy**: Focusing on higher-acuity ASCs and potential partnerships to streamline operations and improve cash flow.
- **Free Cash Flow**: Operating cash flow strong ($83.6M Q3), but variability in physician distributions limits predictability.
- **De Novo Outlook**: Delays in 2025 openings, but 12-18-month timeline for new facilities to reach breakeven remains intact.

Surgery Partners, Inc. (SGRY) Q3 2025 Earnings Call Transcript

Surgical Facility Services

Ancillary Services

SGRY

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