Surgery Partners (Nasdaq: SGRY) remains committed to organizational growth and M&A as it enters the final quarter of the year.
That’s based on remarks by CEO Eric Evans during the company’s Q3 2025 earnings call on Nov. 10.
Broadly, Surgery Partners is focused on its three growth pillars: organic growth, margin improvement and capital deployment for M&A to showcase ongoing execution and alignment with its long-term growth strategy.
Surgery Partners’ physicians performed 166,000 surgical cases in the third quarter, according to Evans. Volume growth was strong in gastrointestinal and musculoskeletal procedures, including orthopedics, driven by an increase in joint-related surgeries. Ophthalmology procedures were slightly lower.
Growth in total joint surgeries at ambulatory surgery centers (ASCs) remains strong for the company, with cases increasing 16% in the third quarter and 23% year to date compared to the same periods last year.
Surgery Partners’ investments in robotics and physician recruitment keep it well positioned to meet high-acuity demand across its portfolio, according to Evans.
The company purchased 74 surgical robots in the third quarter and has filled over 500 new positions at its facilities, many of which are expected to become partners in the future.
Remaining focused on M&A
Surgery Partners has invested around $71 million in capital for acquisitions, adding multiple facilities to its portfolio. It also sold stakes in three ASCs for about $50 million.
“Our disciplined approach prioritizes long-term value over short-term gains,” Evans said on the call. “Importantly, the near- and mid-term pipeline remains robust, with over $300 million in opportunities under active evaluation. We are focusing on deploying capital strategically in the months ahead and anticipate a return to normal levels on annual capital investment.”
Moving into 2026, investments in de novo facilities remain a vital part of Surgery Partners’ growth strategy and among the highest return opportunities in the company’s portfolio, according to Evans.
In Q3 2025, the company opened two new de novos, with nine currently under construction and more than a dozen in the development pipeline.
These de novos mainly target higher-acuity specialties, with most focused on orthopedics, Evans noted. The facilities typically take 12 to 18 months to build, and it can take up to another year after opening to reach break-even, due to the scale of constructing from scratch.
Over the last nine months, several recently opened de novos have been profitable, while others are still ramping up and have not reached break-even as quickly as anticipated, primarily due to construction and regulatory approval delays, Evans noted.
“While this timing creates modest near-term pressure on earnings, these investments are strategically positioned in high-growth markets and are expected to be highly accretive and profitable moving forward,” Evans said. “We remain confident that the current pipeline will drive meaningful value creation and reinforce our long-term double-digit growth algorithm.”
Further, leaders reported that the company has initiated a portfolio review to enhance flexibility, streamline its assets and self-fund long-term growth.
Evans said the focus is on selectively partnering with or divesting facilities to accelerate leverage reduction, boost cash flow generation and sharpen the company’s focus on its core ASC service lines.
The facilities it is evaluating for this effort are primarily larger surgical hospitals that provide services beyond the company’s short-stay surgical focus.
“We remain disciplined and confident in our ability to deploy this capital, supported by a strong pipeline of opportunities that align with our short-stay surgical ethos,” Evans said. “We are confident in the resilience of our growth algorithm, the significant tailwinds in the ASC space and our ability to execute.”
A cautiously optimistic year end
Revenues for the third quarter of 2025 increased 6.6% to $821.5 million, compared to $770.4 million for the third quarter of 2024. Same-facility revenues for the third quarter of 2025 increased 6.3%, compared to the same period in prior year, with a 2.8% increase in revenue per case and a 3.4% increase in same-facility cases.
Payer mix moved modestly, according to the company, with commercial payers representing 50.6% of revenues, down 160 basis points year over year, and governmental sources, primarily Medicare, up 120 basis points.
“We are observing softer-than-expected same-facility volume growth in recent months. Although volumes remain positive and generally in line with industry trends, they have trailed our internal expectations, prompting us to adjust our fourth quarter outlook,” Evans said. “Given our typical seasonal lift in commercial volumes during Q4, we are monitoring this closely and refining expectations accordingly.”
Industry analysts highlighted these challenges following the release of the financial results.
“Management noted on their Q3 earnings call that they saw some below-expected volume trends toward the end of Q3 that prompted them to take a more conservative stance with 2025 guidance, prompting a reduction to revenue and EBITDA expectations for this year,” a note from Jefferies reads. “Drilling deeper into this issue, it appears that the revenue/volume shortfall is occurring mostly in SGRY’s commercial book of business, as Medicare (a lower-paying reimbursement class) volumes are holding up. Additionally, SGRY experienced some nuanced events that are contributing volume headwinds (e.g., retirement of a high-producing doc).”
Guidance for the full year 2025 has been revised to reflect delayed capital deployment, lost earnings from divested ASCs and a more cautious outlook on the commercial payer mix and volume in the fourth quarter.
Surgery Partners now expects revenue of $3.2 billion to $3.3 billion and adjusted EBITDA of $535 million to $540 million.
“We remain disciplined and confident in our ability to deploy capital supported by a strong pipeline of opportunities aligned with our long-term growth strategy,” CFO David Doherty said on the call. “Base-facility revenue growth for the full year is now expected to be closer to the midpoint of our long-term growth algorithm, reflecting a prudent approach to the fourth quarter as we hedge against potential softness in both volume and overall commercial payer mix, while still anticipating positive contributions from both case growth and pricing.”
Headquartered in Brentwood, Tennessee, Surgery Partners has more than 250 locations in 30 states, including ASCs, surgical hospitals, multi-specialty physician practices and urgent care facilities.
