8-K: Surgery Partners Reports Mixed Q4 2025, Sets 2026 Guidance

Surgery Partners, Inc. announced mixed fourth quarter and full year 2025 results, including a net loss, but provided 2026 guidance and authorized a $200 million share repurchase program.

Summary

• Fourth quarter 2025 revenue increased 2.4% to $885.0 million, while full year 2025 revenue increased 6.2% to $3.3 billion.
• Same-facility revenues increased 3.5% for the fourth quarter and 4.9% for the full year.
• Surgical cases decreased 2.1% for the fourth quarter but increased 2.0% for the full year.
• Net loss attributable to Surgery Partners, Inc. was $15.0 million for the fourth quarter and $77.9 million for the full year, significantly narrowing from prior year periods.
• Adjusted EBITDA decreased 4.2% to $156.9 million for the fourth quarter but increased 3.5% to $526.2 million for the full year.
• Initial 2026 guidance (excluding M&A) projects Adjusted EBITDA of at least $530 million and revenue in the range of $3.35 billion to $3.45 billion.
• The Board of Directors authorized a new share repurchase program of up to $200 million of the company's common stock on February 26, 2026.
• Cash and cash equivalents stood at $239.9 million as of December 31, 2025, with $692.8 million of borrowing capacity under its revolving credit facility.
• The company's ratio of total net debt to EBITDA was approximately 4.3x at the end of the fourth quarter of 2025.

Sentiment

Score: 5

Explanation: StockSavvy.ai views this as a neutral-to-slightly-negative filing. While full-year results showed growth and the share repurchase is positive, the Q4 performance missed expectations and showed declines in key metrics, tempered by cautious 2026 guidance.

Positives

• Full year 2025 revenue increased 6.2% to $3.3 billion, demonstrating overall growth.
• Full year 2025 Adjusted EBITDA increased 3.5% to $526.2 million.
• Net loss attributable to Surgery Partners, Inc. significantly narrowed in Q4 2025 to $15.0 million from $108.5 million in Q4 2024, and for the full year to $77.9 million from $168.1 million in FY 2024.
• Strong demand for services and optimism on structural tailwinds underpinning long-term Ambulatory Surgery Center (ASC) market growth.
• Initiated a new share repurchase program of up to $200 million, signaling confidence in valuation and commitment to shareholder returns.
• Total joint growth of 15% year-over-year in Q4 2025 and 19% year-over-year for the full year 2025, indicating success in higher-acuity procedures.
• Recruited 200 new physicians in Q4 2025 and nearly 700 for the full year 2025, expanding physician partnerships.
• Increased the number of surgical facilities to 176 as of December 31, 2025, from 161 in 2024.

Negatives

• Fourth quarter 2025 results did not meet expectations due to significant and unanticipated headwinds.
• Q4 2025 surgical cases decreased 2.1% year-over-year.
• Q4 2025 Adjusted EBITDA decreased 4.2% to $156.9 million.
• Experienced margin pressure in Q4 2025, impacting full-year performance.
• Cash flows from operating activities decreased to $103.4 million in Q4 2025 from $111.4 million in Q4 2024, and for the full year to $274.3 million from $300.1 million in FY 2024.
• Cash and cash equivalents decreased to $239.9 million as of December 31, 2025, from $269.5 million in 2024.
• Leverage calculated using consolidated debt from the balance sheet divided by Adjusted EBITDA, before reducing it for NCI, was 4.9x times.

Risks

• Reductions in payments from government health care programs and private insurance payors.
• Ability to contract with private insurance payors on beneficial terms.
• Changes in payor mix or surgical case mix.
• Failure to maintain or develop relationships with physicians on beneficial or favorable terms.
• Impact of payor controls designed to reduce the number of surgical procedures.
• Challenges in integrating operations of acquired or developed businesses and surgical facilities, attracting new physician partners, or acquiring additional surgical facilities.
• Supply chain issues, including shortages or quality control issues with surgery-related products, equipment and medical supplies.
• Competition for physicians, nurses, strategic relationships, acquisitions, and managed care contracts.
• Ability to attract and retain qualified health care professionals.
• Ability to enforce non-compete restrictions against physicians.
• Ability to manage material liabilities incurred as a result of acquiring or operating surgical facilities.
• Impact of future legislation and other health care regulatory reform actions.
• Ability to comply with current health care laws and regulations.
• Outcome of legal and regulatory proceedings.
• Impact of cybersecurity attacks or intrusions.
• Changes in regulatory, economic, and other conditions of the states where surgical facilities are located.
• The company's indebtedness.
• The social and economic impact of a pandemic, epidemic, or outbreak of a contagious disease on the business.

Future Outlook

Management expects to strengthen performance in 2026 by tightening execution and doubling down on the shift into higher-acuity procedures. The company aims to capture market momentum through continued organic growth, strategic M&A, and effective portfolio optimization. Initial 2026 guidance projects Adjusted EBITDA of at least $530 million and revenue between $3.35 billion and $3.45 billion, excluding M&A, with anticipated organic Adjusted EBITDA growth of 4.2%+ and same-facility revenue growth of 3.0%+.

Management Comments

• "In 2025, Surgery Partners continued to be guided by an unwavering commitment to high-value and high-quality patient care, with strong performance to start the year giving way to significant and unanticipated headwinds that culminated in fourth quarter results that did not meet our expectations." Eric Evans, Chief Executive Officer.
• "Despite these challenging headwinds, demand for our services remains strong, and we remain optimistic on the structural tailwinds underpinning long-term ASC market growth." Eric Evans, Chief Executive Officer.
• "As we progress through 2026, we are proactively strengthening our performance by tightening execution and doubling down on our shift into higher-acuity procedures." Eric Evans, Chief Executive Officer.
• "Our fourth quarter results reflect a degree of margin pressure, which impacted our full-year performance." Dave Doherty, Chief Financial Officer.
• "Looking at 2026, we have taken a measured approach to our guidance as we navigate the near-term operating environment, drive operational improvements across the business, and execute on our core growth pillars to deliver long-term shareholder value." Dave Doherty, Chief Financial Officer.
• "We are confident in our path towards returning to the consistent growth that we know our platform is capable of, supported by strong fundamentals, improving free cash flow, reducing leverage, and executing on our portfolio optimization strategy." Dave Doherty, Chief Financial Officer.

Industry Context

StockSavvy.ai notes that the healthcare services industry, particularly the ambulatory surgery center (ASC) market, continues to benefit from structural tailwinds such as the shift to outpatient care for higher-acuity procedures. Surgery Partners' focus on musculoskeletal procedures and strategic M&A aligns with broader industry trends towards specialized, cost-effective surgical solutions. However, the industry faces ongoing pressures from payor reimbursement rates and supply chain challenges, as evidenced by Surgery Partners' Q4 margin pressure and the need for a 'measured approach' to 2026 guidance.

Comparison to Industry Standards

• The company's 2026 organic Adjusted EBITDA growth guidance of 4.2%+ and same-facility revenue growth of 3.0%+ suggests a moderate growth trajectory within the ASC sector, which is generally in line with established players but may lag some high-growth niche providers.
• The total net debt to EBITDA ratio of 4.3x (or 4.9x using consolidated debt divided by Adjusted EBITDA before NCI) indicates a relatively leveraged position, which is common for companies in the healthcare services sector that pursue M&A, but could be higher than some less acquisitive peers or those with stronger cash flow generation.
• The shift into higher-acuity procedures, such as total joint replacements (19% YoY growth in 2025), positions Surgery Partners to capitalize on a growing segment of the surgical market, a trend observed across leading ASC operators like AmSurg and SCA Health, which are also expanding their complex procedure offerings.

Corporate Governance

Legal Proceedings

• Litigation settlements and other litigation costs of $1.8 million were incurred for the three months ended December 31, 2025.
• Litigation settlements and other litigation costs totaled $10.4 million for the year ended December 31, 2025, which included a $7.3 million litigation settlement loss.

Stakeholder Impact

• Shareholders: Potential benefit from the $200 million share repurchase program and long-term growth strategy, but Q4 underperformance and cautious guidance may cause short-term concern.
• Employees: Focus on 'tightening execution' and 'operational improvements' could imply efficiency drives and potential restructuring.
• Patients: Continued commitment to high-value and high-quality patient care, with a strategic shift towards higher-acuity procedures.
• Physicians: Ongoing efforts to attract new physician partners (200 in Q4, nearly 700 in FY25) and maintain beneficial relationships are crucial for facility utilization and growth.
• Creditors: The leverage ratio of 4.3x (or 4.9x) indicates a notable debt load, but management's stated goal of 'reducing leverage' is a positive signal for debt holders.

Next Steps

• Hold a conference call on March 3, 2026, to discuss financial results.
• Proactively strengthen performance by tightening execution.
• Double down on the shift into higher-acuity procedures.
• Pursue continued organic growth.
• Execute strategic M&A.
• Implement effective portfolio optimization.
• Execute on the authorized share repurchase program.

Key Dates

Recommendation

While full-year results showed growth and the share repurchase program is a positive signal, the fourth quarter's underperformance relative to expectations, coupled with a decrease in surgical cases and Adjusted EBITDA for the quarter, suggests near-term operational challenges. The 2026 guidance is measured, reflecting ongoing pressures. A 'hold' recommendation allows investors to observe if the company can successfully execute its stated strategies to improve operational performance and reduce leverage in the coming quarters, especially given the mixed Q4 results.

Keywords

Surgery Partners, SGRY, earnings, Q4 2025, full year 2025, 2026 guidance, Adjusted EBITDA, revenue, surgical cases, share repurchase, healthcare services, ambulatory surgery centers, ASC market, financial results, investor relations