Nasdaq:SGRY
Surgery Partners, Inc.
A specialized medical technology provider offering surgical implants, instruments, and comprehensive service programs to hospitals and surgical centers.
Key Metrics
Investment Thesis
Bull Case
The company retains a strong cash position of $269.5M with positive operating cash flow that could be used to deleverage or fund further growth if profitability stabilizes; the recurring service contract model typically provides durable, high-margin revenue streams once acquisition integration is complete.
Bear Case
Investors should avoid the stock due to a massive retained earnings deficit of -$737.3M and negative shareholder profit of -$168.1M which signals deep financial distress; the sharp decline in net income combined with high debt levels creates significant uncertainty regarding future dividend sustainability or share buybacks.
About Surgery Partners, Inc.
Surgery Partners, Inc. (SGRY) is a leading provider of surgical technology solutions and services operating primarily within the United States. The company focuses on high-margin medical device sales, service contracts, and strategic acquisitions to expand its footprint in orthopedic and trauma care markets.
Analysis
Management Discussion
While revenue grew to $3.11B, the company faced a severe profitability shock with net income collapsing to $12.5M from $135.3M in 2023, suggesting aggressive accounting adjustments or significant restructuring costs. Cash flow from operations remains healthy at $300.1M, but heavy capital expenditures of $90.4M and other investing outflows of $957.7M indicate a period of intense balance sheet stress.
Industry Overview
The medical device industry is characterized by high barriers to entry, stringent regulatory requirements, and a shift toward value-based care models that favor companies with comprehensive service offerings. Competition is fierce among established players like Stryker and DePuy Synthes, driving the need for consistent innovation and aggressive M&A activity.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Revenue | $2.54B | $2.74B | $3.11B |
| Cost of Revenue | $0 | $0 | $0 |
| Gross Profit | $2.54B | $2.74B | $3.11B |
| Operating Expenses | $2.19B | $2.42B | $2.77B |
| Operating Income | $345.2M | $328.0M | $348.8M |
| G&A | $102.2M | $120.9M | $138.7M |
| Stock-Based Comp | $18.4M | $17.7M | $33.3M |
| D&A | $114.8M | $118.1M | $152.6M |
| Depreciation | $112.1M | $112.8M | $144.8M |
| Amortization | $6.4M | $7.6M | $8.7M |
| Other OpEx | $2.09B | $2.29B | $2.63B |
| Non-Operating Income | $-234.9M | $-193.0M | $-201.7M |
| Pre-Tax Income | $110.3M | $135.0M | $147.1M |
| Income Tax | $23.3M | $-300.0K | $134.6M |
| Continuing Ops | $87.0M | $135.3M | $12.5M |
| Discontinued Ops | $0 | $0 | $0 |
| Net Income | $87.0M | $135.3M | $12.5M |
| Minority Interest | $141.6M | $147.2M | $180.6M |
| Net to Common | $-54.6M | $-11.9M | $-168.1M |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Current Assets | $921.0M | $895.0M | $1.12B |
| Cash & Equivalents | $282.9M | $195.9M | $269.5M |
| Accounts Receivable | $456.3M | $496.4M | $579.1M |
| Inventory | $71.4M | $75.2M | $88.4M |
| Other Current Assets | $110.4M | $127.5M | $182.4M |
| Long-Term Assets | $5.76B | $5.98B | $6.77B |
| Intangibles | $42.3M | $54.8M | $45.7M |
| Goodwill | $4.14B | $4.33B | $5.07B |
| Operating Leases | $279.1M | $255.3M | $295.7M |
| Other LT Assets | $1.30B | $1.35B | $1.36B |
| Total Assets | $6.68B | $6.88B | $7.89B |
| Current Liabilities | $493.4M | $523.0M | $624.4M |
| Accounts Payable | $151.6M | $171.8M | $208.7M |
| Current Leases | $36.5M | $37.6M | $41.0M |
| Other Current Liab | $305.3M | $313.6M | $374.7M |
| Long-Term Liabilities | $3.25B | $3.32B | $4.07B |
| LT Operating Leases | $271.4M | $248.9M | $292.1M |
| Other LT Liab | $2.98B | $3.07B | $3.78B |
| Total Liabilities | $3.74B | $3.84B | $4.69B |
| Shareholders' Equity | $2.94B | $3.03B | $3.20B |
| Paid-In Capital | $2.48B | $2.50B | $2.52B |
| Retained Earnings | $-557.3M | $-569.2M | $-737.3M |
| AOCI | $76.2M | $57.5M | $4.8M |
| Total L&E | $6.68B | $6.88B | $7.89B |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Net Income (CFO) | $87.0M | $135.3M | $12.5M |
| Non-Cash Adjustments | $35.2M | $134.6M | $211.0M |
| Working Capital Changes | $36.6M | $23.9M | $76.6M |
| Cash from Operations | $158.8M | $293.8M | $300.1M |
| Capital Expenditures | $80.6M | $88.8M | $90.4M |
| Cash from Investing | $-307.9M | $-225.6M | $-488.5M |
| Debt Issuances | $217.8M | $826.6M | $1.73B |
| Debt Repayments | $862.0M | $807.1M | $1.28B |
| Cash from Financing | $42.1M | $-155.2M | $262.0M |
| FX Effect | $0 | $0 | $0 |
| Net Change in Cash | $-107.0M | $-87.0M | $73.6M |
| Beginning Cash | $389.9M | $282.9M | $195.9M |
| Ending Cash | $282.9M | $195.9M | $269.5M |
Frequently Asked Questions
How does Surgery Partners, Inc. make money?
Revenue is driven by the sale of surgical implants and instruments, recurring revenue from post-surgical service contracts, and significant growth from strategic acquisitions totaling $378.8M in the latest period.
What are the main risks for SGRY?
Significant debt load with $1.28B in recent repayments against $1.73B in issuances creating refinancing pressure; substantial goodwill of $5.07B vulnerable to impairment charges if acquisition integration fails or market conditions deteriorate; sharp drop in net profit from $135.3M to $12.5M indicating potential margin compression or one-time charges.
What is SGRY's competitive advantage?
Strong market positioning in orthopedic trauma and joint replacement segments supported by a robust installed base generating high-margin service revenue; extensive product portfolio including spinal, trauma, and joint systems that provide cross-selling opportunities to customers.
Related Companies
Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.