Image by Pete Linforth from PixabayAn activist investor is pushing Surgery Partners Inc. (Nasdaq: SGRY) to overhaul its strategy, arguing the company should sell its surgical hospitals and focus solely on its ambulatory surgery center (ASC) business.
Ortelius Advisors issued an open letter to Surgery Partners shareholders Tuesday criticizing the company’s performance and calling for sweeping operational, financial and governance changes. In its letter, the New York-based investment firm said Surgery Partners has failed to capitalize on favorable industry trends despite owning a portfolio of high-quality assets.
“Ortelius Advisors, L.P. (‘Ortelius’ or ‘we’) believes that Surgery Partners, Inc. (‘Surgery’ or the ‘Company’) has significant upside potential, based on its high-quality assets, favorable industry dynamics, and considerable free cash flow capabilities,” Peter DeSorcy, managing member for Ortelius, wrote. “However, we are deeply concerned by the Company’s abysmal performance, and destruction of stockholder value.”
At the center of the activist investor’s argument is the belief that Surgery Partners should divest its surgical hospitals and become a “pure-play ambulatory surgery centers business.”
Separating the businesses would unlock value by allowing the remaining company to focus on faster-growing outpatient services, according to Ortelius. The firm also contends that selling the surgical hospitals could generate substantial proceeds that could then be used to repurchase shares, reduce debt and strengthen the company’s balance sheet.
“The remaining entity … would exhibit stronger revenue growth, higher EBITDA margins, and larger free cash flow yields, and warrant a much expanded EV/EBITDA multiple,” the letter continued.
Beyond asset sales, Ortelius outlined a broader list of changes it believes are necessary to improve Surgery Partners’ performance. These include repurchasing stock, paying down debt and reviewing strategic alternatives. The investor also called for changes to Surgery Partners’ leadership and board oversight.
“Results related to strategy, investment allocation, operations, financials, capital structure, corporate governance, and stockholder communications are unacceptable, and stockholders have lost confidence in Surgery’s leadership, judgement, execution, and decision-making abilities,” DeSorcy wrote.
ASCs have become one of the fastest-growing segments of the health care delivery system, driven by advances in minimally invasive procedures, shifting reimbursement policies and growing demand for lower-cost care settings. Many operators and investors have increasingly focused on expanding ASC networks to capture that migration.
Ortelius’ proposal suggests Surgery Partners could more fully capitalize on that trend by narrowing its focus to outpatient facilities rather than maintaining a mixed portfolio of ASCs and surgical hospitals.
Ortelius framed its proposal as a path to unlock what it sees as untapped value in the company’s assets.
“Ortelius strongly believes that there are multiple ways to win, and many paths to building and unlocking intrinsic value over the near- and long-term,” DeSorcy wrote.
Ortelius has taken a similar activist approach elsewhere in health care.
The firm recently pressured Brookdale Senior Living (NYSE: BKD) to overhaul its board and monetize underperforming assets, arguing the company needed to unlock real estate value and improve its capital structure after years of underperformance.
“After years of missteps, shortcomings, underperformance, and chronic undervaluation, stockholders have lost confidence in Brookdale’s leadership, judgment, execution and decision-making abilities,” DeSorcy wrote in a May 2025 letter.
Surgery Partners reported Q4 2025 and full-year financial results the first week of March.
Broadly, the company couched last year as “a tale of two halves” where positives early on in 2025 turned into “significant headwinds” later on. Overall, however, Surgery Partners remained bullish on its organic growth, acquisition pipeline and volume of higher-acuity cases.
Fourth-quarter revenue rose to $885 million, up from $864.4 million a year earlier, Surgery Partners reported. For the full year, revenue reached $3.3 billion, compared with $3.1 billion in 2024.
“We remain disciplined and confident in our ability to improve the business and return to the consistent and predictable growth the market has come to expect from us,” CFO David Doherty said on a conference call with investors.
Surgery Partners CEO Eric Evans shared more about his company’s strategy and future outlook during a Tuesday presentation at the Barclays 28th Annual Global Healthcare Conference.
While he did not bring up Ortelius by name, he specifically addressed Surgery Partners’ surgical hospitals and portfolio optimization during the presentation.
“Let me start by saying I love surgical hospitals,” Evans said. “There’s only 240 or so of them in the U.S. There won’t be any more that are physician-owned. These are JV-physician hospitals, pre-moratorium. What’s amazing about these assets is they allow us to have physician partnership across the acuity spectrum.”
Almost all of Surgery Partners’ surgical hospitals have an ASC network around them as well, he explained.
“They’re a unique asset,” Evans continued. “They’re a set moment in time, and the idea with our physician partners is, let’s keep their higher-acuity patients in a facility they own and can have control of the quality, have control of the experience. And then let’s decant ourselves and build ASCs to pull that lower acuity-stuff out. So we love the model.”
Still, Evans said investor feedback has pushed Surgery Partners to simplify its portfolio and focus more tightly on its “core ethos.”
As part of that effort, the company is reviewing a small number of larger, more capital-intensive assets that carry higher debt and generate less free cash flow than its typical operations. Potential divestitures could help reduce leverage, improve cash flow and sharpen the company’s growth profile, Evans noted.
